kbc group company presentation 1q 2021 · 2021. 6. 12. · company presentation 1q 2021 kbc group -...

1

KBC GroupCompany presentation1Q 2021

KBC Group - Investor Relations Office – E-mail: [email protected]

More information: www.kbc.com

mailto:[email protected]

https://www.kbc.com/

2

▪ This presentation is provided for information purposes only. It does not constitute an offer to sell or the solicitation to buy anysecurity issued by the KBC Group.

▪ KBC believes that this presentation is reliable, although some information is condensed and therefore incomplete. KBC cannot beheld liable for any loss or damage resulting from the use of the information.

▪ This presentation contains non-IFRS information and forward-looking statements with respect to the strategy, earnings and capitaltrends of KBC, involving numerous assumptions and uncertainties. There is a risk that these statements may not be fulfilled andthat future developments differ materially. Moreover, KBC does not undertake any obligation to update the presentation in linewith new developments.

▪ By reading this presentation, each investor is deemed to represent that it possesses sufficient expertise to understand the risksinvolved.

Important information for investors

3

❖ Commercial bank-insurance franchises in coremarkets performed very well

❖ Customer loans and customer deposits increasedy-o-y in most of our core countries

❖ Higher net interest income and net interest margin

❖ Higher net fee and commission income

❖ Higher net gains from financial instruments at fairvalue and higher net other income

❖ Higher sales of non-life and life insurance y-o-y

❖ Strict cost management, but higher bank taxes(recognized upfront)

❖ Net impairment releases

❖ Solid solvency and liquidity

Comparisons against the previous quarter unless otherwise stated

1Q 2021 key takeaways

Excellent net result of 557m EUR in 1Q21

➢ ROE 16%*

➢ Cost-income ratio excluding bank taxes46%

➢ Combined ratio 78%

➢ Credit cost ratio -0.17% (-0.11% without collective Covid-19 impairments**)

➢ Common equity ratio 17.6% (B3, DC, fully loaded)

➢ Leverage ratio 5.8% (fully loaded)

➢ NSFR 148% & LCR 157%

1Q211Q21 financial performance

Net result

* when evenly spreading the bank tax throughout the year** Collective Covid-19 impairments lowered from 783m EUR at end 2020 to 757m EUR at end 1Q21

-5

210

697

538 557

2Q201Q20 3Q20 4Q20 1Q21

4

1.068

1.933

557

441

237

127

NFCI

77

NII Technical Insurance

Result*

-131

FIFV

62

Other Income**

Total Income

-424

Bank taxes

-896

Opex excl. bank tax

Impairments Other

-2

Income taxes

1Q21 net result

Q-o-Q

Y-o-Y

* Earned premiums – technical charges + ceded reinsurance** Dividend income + net realised result from debt instruments FV through OCI + net other income

+15%0% +9% +7% -5%

-11% +3% +33% +31% -4%

Overview of building blocks of the 1Q21 net result

+3%

5

1Q21

BE

BU

IM B

U

Total Exceptional Items BE BU

0m EUR -55m EUR -6m EUR

Total Exceptional Items IM BU

Total Exceptional Items (pre-tax)

Total Exceptional Items (post-tax) 0m EUR -44m EUR -7m EUR

1Q20

IRL - NOI – Additional impact for the tracker mortgage reviewHU – Impairments – Modification loss from moratorium

CZ

BU

Total Exceptional Items CZ BU

NII – One-off technical item (insurance)

+12m EUR

-18m EUR

-18m EUR

+12m EUR

NOI – Legacy legal files

GR

OU

P

Total Exceptional Items GROUP

Impairments – Software

Opex – Update of software capitalisation policy

* +10m EUR at KBC Group level: +11m EUR in Belgium, -4m EUR in the Czech Republic, +1m EUR in Hungary and +2m EUR in Group Centre** -59m EUR at KBC Group level: -28m EUR in Belgium, -6m EUR in the Czech Republic, -2m EUR in Slovakia, -5m EUR in Hungary and -18m EUR in Group Centre

Main exceptional items

4Q20

+5m EUR

-6m EUR

-3m EUR

-2m EUR

+5m EUR

-6m EUR

-5m EUR

-59m EUR**

-49m EUR

+10m EUR*

NII – Early termination of 1 large corporate file

6

Contents

1

Strong solvency and solid liquidity

3

1Q 2021 performance of KBC Group

4

1Q 2021 performance of business units

5 Looking forward

Annex 3: Other items

Annex 2: Differently: the next level

2 Covid-19

Annex 1: Company profile

https://multimediafiles.kbcgroup.eu/ng/published/KBCCOM/PDF/COM_pdf_kbc_quarterly_report_4Q2012_en.pdf

https://multimediafiles.kbcgroup.eu/ng/published/KBCCOM/PDF/COM_pdf_kbc_quarterly_report_4Q2012_en.pdf

7

KBC Group

Section 1

1Q 2021 performance of KBC Group

8

Net result at KBC Group

* Difference between net result at KBC Group and the sum of the banking and insurancecontribution is accounted for by the holding-company/group items

CONTRIBUTION OF BANKING ACTIVITIES TO KBC GROUP NET RESULT*

-5

210

697

538 557

4Q201Q20 2Q20 3Q20 1Q21

NET RESULT AT KBC GROUP*

-11

42

546

437 412

3Q20 1Q212Q201Q20 4Q20

3685 73 70 56

119 134

74 101

-31 -50-12 -11

4Q202Q20

-20-13

1Q20 3Q20 1Q21

3

173

133

157

147

CONTRIBUTION OF INSURANCE ACTIVITIES TO KBC GROUP NET RESULT*

Amounts in m EUR

Non-Life result

Life result

Non-technical & taxes

9

Higher net interest income and net interest margin

▪ Net interest income (1,068m EUR)• NII increased by 1% q-o-q excluding the positive one-off item at NII

insurance of 5m EUR in 4Q20

• NII banking increased by 1% q-o-q, driven primarily by:o organic loan volume growtho higher margin on new production mortgages than the margin on the

outstanding portfolio in Belgium and Slovakiao intensified charging of negative interest rates on certain current accounts

to corporates and SMEso lower funding costso +7m EUR NII due to the consolidation of OTP SK (as of 1Q21)o appreciation of the CZK versus the EURo slightly higher netted positive impact of ALM FX swapspartly offset by:o lower reinvestment yieldso lower number of days (-15m EUR q-o-q)

• The 11% y-o-y NII decrease was mainly the result of the CNB ratecuts, the depreciation of the CZK & HUF versus the EUR, the negativeimpact of lower reinvestment yields and a 12m EUR positive one-offin 1Q20

▪ Net interest margin (1.78%)• Increased by 3 bps q-o-q and decreased by 19 bps y-o-y for the

reasons mentioned above

NIM **

NII

971 977 947 954

10561,068

14106 117111

1

-1

1,066

1Q20 2Q20

15131

3Q20 4Q20

1698

1Q21

1,1951,083 1,122 1,067

3Q201Q20 2Q20 4Q20

1.97%

1Q21

1.81%1.82%1.75% 1.78%

Amounts in m EUR

NII - netted positive impact of ALM FX swaps*

NII - Holding-company/group

NII - Insurance

NII - Banking

* From all ALM FX swap desks** NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL*** Customer deposits, including debt certificates but excluding repos. Customer deposit volumes excluding debt certificates & repos +4% q-o-q and +12% y-o-y

ORGANIC VOLUME TREND Total loans** o/w retail mortgages Customer deposits*** AuM Life reserves

Volume 161bn 73bn 232bn 220bn 28bn

Growth q-o-q* +1% +1% +8% +4% +1%

Growth y-o-y +1% +8% +10% +14% +3%

10

Higher net fee and commission income

Amounts in bn EUR

AuM

193202 204

212220

3Q201Q20 1Q212Q20 4Q20

275 241 250 256 284

225214 213 223

229

-71 -68 -73 -77 -72

1Q211Q20

388

4Q202Q20 3Q20

429390 403

441

Distribution Banking services Asset management services

Amounts in m EUR ▪ Net fee and commission income (441m EUR)• Up by 9% q-o-q and by 3% y-o-y

• Q-o-q increase was the result of the following:o Net F&C income from Asset Management Services increased by

11% q-o-q as a result of higher management fees and entry feesfrom mutual funds and unit-linked life insurance products

o Net F&C income from banking services rose by roughly 3% q-o-qas higher securities-related fees and higher network incomewere partly offset by lower fees from payment services (partlyseasonal effect, partly due to stricter Covid-19 lockdowns) andlower fees from credit files & bank guarantees. Note that theconsolidation of OTP SK (as of 1Q21) contributed 2m EUR

o Distribution costs fell by 5% q-o-q due chiefly to lowercommissions paid linked to banking products and decreased lifeinsurance sales

• Y-o-y increase was mainly the result of the following:o Net F&C income from Asset Management Services rose by 3%

y-o-y as a result of higher management fees, partly offset bylower entry fees

o Net F&C income from banking services increased by 2% y-o-y(+3% y-o-y excluding FX effect) driven mainly by highersecurities-related fees, higher network income and higher feesfrom credit files & bank guarantees, partly offset by lower feesfrom payment services

o Distribution costs rose by 3% y-o-y

▪ Assets under management (220bn EUR)• Increased by 4% q-o-q due to net inflows (+1%) and a positive price

effect (+3%)

• Increased by 14% y-o-y due almost entirely to a positive price effect

F&C*

* The building blocks of the 2020 F&C figures were restated, resulting in a shift of roughly 5m EUR per quarter from Banking services to Asset Management services, related to F&C income from CSOB CZ Pension company

11

▪ Insurance premium income (gross earned premiums) at 745m EUR• Non-life premium income (453m EUR) increased by

2% y-o-y

• Life premium income (292m EUR) fell by 24% q-o-qand by 2% y-o-y

▪ The non-life combined ratio for 1Q21amounted to an excellent 78% (90% in 1Q20).This is the result of 2% y-o-y earned premiumgrowth combined with 17% y-o-y lowertechnical charges. The latter was due mainly tolower storm claims (6m EUR in 1Q21compared with 51m EUR in 1Q20) and lowernormal claims (especially in ‘Motor’, duelargely to Covid-19), partly offset by highermajor claims (especially in ‘General third-partyliability’)

Insurance premium income up y-o-yand excellent combined ratio

COMBINED RATIO (NON-LIFE)

PREMIUM INCOME (GROSS EARNED PREMIUMS)

9M1H1Q FY

90%83%

78%83% 85%

2020 2021

443 435 448 450 453

297 276 267382

292

3Q201Q20

740

2Q20 4Q20

712

1Q21

715

832745

Life premium income Non-Life premium income

Amounts in m EUR

12

Non-life and life sales up y-o-y

▪ Sales of non-life insurance products• Up by 4% y-o-y chiefly in classes ‘Fire’, ‘General third-

party liability’ and ‘Workmen’s compensation’

▪ Sales of life insurance products• Decreased by 19% q-o-q and increased by 10% y-o-y

• The q-o-q decrease was driven by both lower sales ofguaranteed interest products in Belgium (attributablechiefly to traditionally higher volumes in tax-incentivisedpension savings products in 4Q20) and unit-linkedproducts in Belgium and the Czech Republic

• The y-o-y increase was driven mainly by higher sales ofunit-linked products in Belgium (chiefly due to the strongperformance in Private Banking and CBC in 1Q21)

• Sales of unit-linked products accounted for 46% of totallife insurance sales in 1Q21

LIFE SALES

NON-LIFE SALES (GROSS WRITTEN PREMIUM)

177

327205 256 217

249

235

214

326

254

1Q21

471

1Q20 2Q20 4Q203Q20

427

561

420

582

Unit-linked productsGuaranteed interest products

567

415 416 405

590

1Q20 2Q20 4Q203Q20 1Q21

Amounts in m EUR

13

Higher FIFV and higher net other income

▪ The q-o-q increase in net gains from financialinstruments at fair value was attributable mainlyto:• higher dealing room & other income

• a positive change in ALM derivatives

• a higher net result on equity instruments (insurance)

partly offset by:

• lower credit and funding value adjustments due to stablecounterparty credit and KBC funding spreads in 1Q21versus decreasing counterparty credit and KBC fundingspreads in 4Q20, which more than offset the effect oflower derivative exposures (increasing yield curve) andhigher market value adjustmentso FVA: 8m EUR (-10m EUR q-o-q)o CVA: 18m EUR (-13m EUR q-o-q)o MVA: -2m EUR (+2m EUR q-o-q)

▪ Net other income amounted to 53m EUR, more orless in line with the normal run rate of around 50mEUR per quarter

FIFV

Amounts in m EUR

-186

10045 25

-59

126

42 75

-82

-30-58

19

1Q20

55

2Q20

-3 31

3Q20

-2 13 23

4Q20

-7

1Q21

-385

253

8580

127

35

5053

37 37

53

2Q201Q20 3Q20 4Q20 1Q21

NET OTHER INCOME

Dealing room & other income

MVA/CVA/FVA

M2M ALM derivatives

Net result on equity instruments (overlay insurance)

14

Strict cost management, higher bank taxes

▪ The C/I ratio excluding bank taxes amounted to 46%in 1Q21

▪ Operating expenses excluding bank taxes decreasedby 5% q-o-q primarily as a result of:

o lower staff expenseso seasonally lower marketing costs and professional feespartly offset by:o 8m EUR costs due to the consolidation of OTP SK (as of

1Q21)o appreciation of the CZK versus the EUR

▪ Operating expenses excluding bank taxes decreasedby 4% y-o-y due chiefly to:• lower staff expenses (despite consolidation of OTP SK in

1Q21)

• cost savings triggered by Covid-19, such as lower marketing& facilities costs and lower professional fees

• lower software depreciations

• depreciation of the CZK & HUF versus the EUR

▪ Cost/income ratio (group) adjusted for specific items*at 53% in 1Q21 (57% in FY20). Cost/income ratio(group): 68% in 1Q21, distorted by bank taxes

▪ Our FY21 guidance for opex excluding bank taxesremains unchanged: +2% y-o-y like-for-like

▪ Total bank taxes (including ESRF contribution) areexpected to increase by 2% y-o-y to 512m EUR in FY21

OPERATING EXPENSES

931 877 905 939 896

407 424

1Q20

2127

2Q20 3Q20

49

4Q20 1Q21

1,338

904 926 988

1,320

Operating expensesBank tax

* See glossary (slide 95) for the exact definition** Still subject to changes

Amounts in m EUR

Amounts in m EUR

TOTAL Upfront Spread out over the year

1Q21 1Q21 1Q21 2Q21e 3Q21e 4Q21e

BE BU 311 311 0 0 0 0

CZ BU 50 50 0 0 0 0

Hungary 44 25 18 21 22 23

Slovakia 6 3 3 0 0 1

Bulgaria 9 9 0 0 0 0

Ireland 4 3 1 1 1 20

GC 0 0 0 0 0 0

TOTAL 424 402 22 22 23 44

BANK TAX SPREAD IN 2021 (PRELIMINARY)**

15

Overview of bank taxes*

INTERNATIONAL MARKETS BUCZECH REPUBLIC BU

BELGIUM BUKBC GROUP

58 2521

49

43

19

20

1Q20 2Q20 3Q20 4Q20 1Q21

63

77

ESRF contribution Common bank taxes

222 242

6770

1Q20 2Q20 1Q213Q20

0

4Q20

289

2 0

311


12 13

2937

4Q203Q20

0

1Q20 2Q20 1Q21

41

0 0

50


292

2149

297

115 127

1Q211Q20 3Q20

225

2Q20 4Q20

407

27

424

Common bank taxes

European Single Resolution Fund (ESRF) contribution

* This refers solely to the bank taxes recognised in opex, and as such it does not take account of income tax expenses, non-recoverable VAT, etc.** The C/I ratio (group) amounted to 46% excluding these bank taxes

Amounts in m EUR

Bank taxes of 424m EUR in 1Q21. On a pro rata basis, banktaxes represented 12.5% of 1Q21 opex at KBC Group**

Bank taxes of 311m EUR in 1Q21. On a pro rata basis, banktaxes represented 13.3% of 1Q21 opex at the Belgium BU

Bank taxes of 50m EUR in 1Q21. On a pro rata basis, bank taxes represented 6.8% of 1Q21 opex at the CZ BU

Bank taxes of 63m EUR in 1Q21. On a pro rata basis, bank taxes represented 16.3% of 1Q21 opex at the IM BU

16

Net impairment releases and excellent credit cost ratio

▪ Net impairment releases• Next to a 26m EUR reversal of collective Covid-19 ECL (lowering

the total collective Covid-19 impairments from 783m EUR at end2020 to 757m EUR at end 1Q21), 1Q21 also benefited fromimpairment releases in some corporate files in Belgium and theCzech Republic

• 1m EUR impairment release on ‘other’

▪ The credit cost ratio in 1Q21 amounted to:• -11 bps (16 bps in FY20) without collective Covid-19 ECL

• -17 bps (60 bps in FY20) with collective Covid-19 ECL

▪ The impaired loans ratio amounted to 3.3%, 1.8% of whichover 90 days past due

ASSET IMPAIRMENT

78 9957 57

43 66

-50

2Q20

-26-5

746

4Q20

20

1Q20

12

11

3Q20

-1 -1

1Q21

141122

857

63

-77

IMPAIRED LOANS RATIO

3Q20

1.8%1.9%

1Q211Q20

1.8%1.9%

2Q20 4Q20

1.8%

3.3% 3.4%3.2% 3.3% 3.3%

CREDIT COST RATIO

FY16

-0.11%

FY20FY18FY15

-0.17%

FY17 FY19

0.44%0.23%

0.16%

1Q21

0.09%

-0.06% -0.04%

0.12%

0.60%

-0.06%

Impaired loans ratio of which over 90 days past due

Collective Covid-19 ECL

Other impairments Impairments on financial assets at AC and FVOCI

Amounts in m EUR

CCR with collective Covid-19 ECL CCR without collective Covid-19 ECL

17

Section 2

Covid-19

KBC Group

18

COVID-19 (1/9)

The government & sector measures in each of our core countries are unchanged q-o-q

Opt-in: 3 months for consumer finance , 6-9months for mortgages and non-retail loans(originally until 31 Oct 2020)Application period extended for a second time (to 31Mar 2021). All deferrals to expire at the end of June(max. total deferral period of 9 months)

• For private persons: deferral of principal andinterest payments, while only deferral ofprincipal payments for non-retail clients

• Interest is accrued over the deferral period,apart from families with net income of lessthan 1,700 EUR. For the latter group, thisresults in a modification loss for the bank(-11m EUR booked in 2Q20)

Belgium

Def

erra

l of

pay

men

tsG

uar

ante

e Sc

hem

e &

liqu

idit

y as

sist

ance

Hungary

Opt-in: 3 or 6 monthsApplication period finished on 30 Sep 2020, however endof Oct 2020 all deferrals expired

• Applicable for retail and non-retail clients• For private persons and entrepreneurs: deferral

of principal and interest payments, while onlydeferral of principal payments for non-retailclients

• Interest is accrued over the deferral period, butmust be paid in the final instalment, resulting in amodification loss for the bank (-5m EUR, booked in2Q20)

• For consumer loans, the interest during thedeferral period may not exceed the 2-week reporate + 8%

Czech RepublicOpt-out: a blanket moratorium originally until 31 Dec 2020 Extension of the deferral period until 30 Jun 2021

• Applicable for retail and non-retail clients• Extension conditions are the same as the

original moratorium• Deferral of principal and interest payments• Interest is accrued over the deferral period, but

unpaid interest cannot be capitalised and mustbe collected on a linear basis during theremaining (extended) lifetime. This resulted ina modification loss for the bank (-18m EURbooked in 1Q20; revised to -11m EUR in 2Q20 andincreased to -12m EUR in 4Q20 due to the extension)

• A state guarantee scheme of up to 40bn EURto cover losses incurred on future non-retailloans granted before 31 Dec 2020 to viablecompanies, with a tenor of max. 12 monthsand a maximum interest rate of 1.25%.Guarantee covers 50% of losses above 3% oftotal credit losses and 80% above 5% of losses

• As of 3Q, a revised state guarantee scheme of

up to 10bn EUR has been in place to cover

losses on future SME loans granted before 31

Dec 2020 (extended until Jun 2021), with a

tenor between 1 and 3 years (extended to 5

years) and with a maximum interest rate of 2%

(or 2.5% if tenor > 3 years). Guarantee covers

80% of all losses

• The Czech-Moravian Guarantee and DevelopmentBank (CZMRB) launched several guaranteeprograms (COVID II, COVID II Praha, COVID III) forworking capital loans provided by commercial banksto non-retail clients. The loan amount isguaranteed up to 80% or 90% of the loan amount.Interest on these loans is subsidised up to 25%(COVID II). COVID III extended until year-end 2021

• The Export Guarantee and Insurance Corporation(EGAP) under its COVID Plus program offersguarantees on loans provided by commercial banks.EGAP guarantees up to 90% of the loan amount,depending on the rating of the debtor. The programis aimed at companies in which exports accountedfor more than 20% of turnover in 2019

• A guarantee scheme is provided byGarantiqa and the Hungarian DevelopmentBank. These state guarantees can cover upto 90% of the loans with a maximum term of6 years

• Funding for growth scheme (launched byMNB): a framework amount of 4.2bn EURfor SMEs that can receive loans with a 20-year tenor and at a maximum interest rateof 2.5%

• Annual interest rate on personal loansgranted by commercial banks may notexceed the central bank base rate by morethan 5pp (until 31 Dec 2020)

19

Opt-in: 9 months or 6 months (for leases)Application period is still running (but most payment holidays ended in 1Q 2021)• Applicable for retail customers, SMEs and

entrepreneurs• Deferral of principal and interest payments• Interest is accrued over the deferral period, but

the customer has the option of paying allinterest at once after the moratorium or payingit on a linear basis. The latter option wouldresult in an immaterial modification loss for thebank

Slovakia

Def

erra

l of

pay

men

tsG

uar

ante

e Sc

hem

e &

liq

uid

ity

assi

stan

ce

IrelandBulgaria

Opt-in: 3 to 6 months Application period expired on 30 Sep 2020• Applicable for mortgage loans, consumer

finance loans and business banking loanswith a repayment schedule

• Deferral of principal and interest paymentsfor up to 6 months (with review after 3months) for mortgages & consumer financeand 3 months for business banking loans

• Option for customers to extend their loanterm by up to 6 months to match thepayment holiday

• Interest is accrued over the deferral period

• Anti-Corona Guarantee program offered by theSlovak Investment Holding (SIH) and aimed atSMEs, consists of two components: (i) an 80%state guarantee with a 50% portfolio cap and (ii)an interest rate subsidy of up to 4% p.a.

• In addition, financial aid in the form of stateguarantee schemes, with guaranteed fee subsidycan be provided by (i) the Export-Import Bank ofSlovakia (guarantee of up to 80% for loans < 2mEUR) and the (ii) the Slovak Investment Holding(guarantee of up to 90% for loans of 2-20m EUR).No portfolio cap

COVID-19 (2/9)

The government & sector measures in each of our core countries are unchanged q-o-q

• 0.4bn EUR of state guarantees providedby the Bulgarian Development Bank tocommercial banks. Of this amount,0.1bn EUR is used to guarantee 100% ofconsumer loans, while 0.3bn EUR isplanned to be used to guarantee 80% ofnon-retail loans

• The Irish authorities put substantial reliefmeasures in place, amongst othermeasures, via the SBCI. KBC Bank Ireland ismainly focused on individual customers,therefore the relief programs for businesscustomers are less relevant

Opt-in: 9 months (deferral until 31 Dec 2021 at

the latest)

Application period expired on 31 Mar 2021• Applicable for retail and non-retail customers• Deferral of principal with or without deferral

of interest payments• For both, full and partial deferrals, the tenor is

extended by 9 months (or 6+3)• Interest is accrued over the deferral period

and repaid in 12 months for consumers; in 18months (or 12+6) for non-retail or 60 monthsfor mortgages in equal instalments

20

COVID-19 (3/9)

Overview of EBA-compliant payment holidays and public Covid-19 guarantee schemes

By the end of March 2021:• The volume of loans granted payment holidays, according to the EBA definitions,

amounted to 13.1bn EUR or 8% of the total loan book**

• Approx. 91%* of EBA-compliant moratoria already expired, of which 98% have resumedpayments, whilst only 1% are new defaults

• Government-guaranteed loans (under the Covid-19 scheme) amounted to 929m EUR

Payment holidays – by country: Payment holidays – by segment:

Loans and advances under public Covid-19 guarantee schemes:

* Excluding Hungary (opt-out) ** Loans to customers, excluding reverse repos (and bonds)

Status: 31 Mar 2021 Loans granted(m EUR)

# obligorsk

KBC Group 929 12

of which:

SME 513

Corporate 399

Status: 31 Mar 2021 Loan deferrals granted

Expired loan deferrals

Total(bn EUR)

% of total loan

portfolio

% of deferrals granted

KBC Group 13.1 8% 91%*

of which:

Mortgages 4.7 6% 98%

SME 4.0 12% 89%

Corporate 3.7 8% 87%

Status: 31 Mar 2021 Loan deferrals granted

Expired loan deferrals

Total(bn EUR)

% of total loan

portfolio

% of deferrals granted

KBC Group 13.1 8% 91%*

of which:

Belgium 7.3 7% 89%

Czech Republic 2.1 7% 100%

Hungary (opt-out) 1.6 31%No longer

EBA-compliant

Slovakia 0.8 9% 83%

Bulgaria 0.2 6% 70%

Ireland 1.2 12% 100%

21

COVID-19 (4/9)

IFRS 9 scenarios

Macroeconomic scenarios*March 2021

OPTIMISTICSCENARIO

BASE-CASE SCENARIO

PESSIMISTICSCENARIO

Virus spread and impact more quickly under control thanks to earlier than expected large-scale availability of vaccines, allowing social distancing measures and other precautionary measures to be lifted sooner

Start of vaccination process and wider testing and tracing will allow only a very moderate easing of precautionary measures in H1 2021. From mid-2021 on, the normalisation of socio-economic interactions will be helped by the mass rollout of effective vaccines. However, as the vaccination process will take time, socio-economic interactions will not return to normal before 2022

The virus reappears and continues to weigh on society and the economy, because of setbacks in the vaccination process (e.g., logistical problems, disappointing immunity results, etc.)

Steep and steady recovery from the first half of 2021 onwards, with a fast return to pre-Covid-19 levels of activity

The recovery will be gradual. It will take until the second half of 2021 for the mass rollout of vaccines to reinforce the recovery to pre-Covid-19 levels of activity by mid-2022

Another (series of) shock(s) takes place, leading to an interrupted and unsteady path to recovery

▪ One year into the pandemic, the vaccinationcampaigns are paving the way for (future)gradual re-openings of the economy. However,vaccination is progressing more slowly thanexpected in the EU and new surges in thepandemic have hit several EU countries duringthe first quarter.

▪ Because of this uncertainty, we continueworking with three alternative scenarios: abase-case scenario, a more optimistic scenarioand a more pessimistic scenario

• The definition of each scenario reflects thelatest virus-related and economicdevelopments, with the following probabilities:60% for the base-case, 30% for the pessimisticand 10% for the optimistic scenario (versus55%-35%-10% at the end of FY20)

• The macroeconomic information does not yet reflect the official macroeconomic figures for 1Q 2021as reported by different authorities

Real GDP growth

Optimistic Base Pessimistic Optimistic Base Pessimistic

Euro area 7.3% 3.8% -0.5% 4.1% 4.1% 1.8%

Belgium 7.5% 4.1% 0.2% 3.6% 4.0% 1.6%

Czech Republic 4.4% 3.5% 0.7% 5.1% 4.6% 2.1%

Hungary 5.5% 4.2% 2.5% 5.5% 5.0% 3.5%

Slovakia 5.6% 4.2% 2.2% 4.8% 4.2% 3.5%

Bulgaria 4.0% 3.0% -1.0% 3.0% 4.0% 2.0%

Ireland 8.0% 5.0% 1.0% 7.0% 4.0% 1.0%

2021 2022

▪ The economic outlook for the home markets remains aligned to thatof the euro area and confirms the better-than-expected level ofresilience. However, the high rate of Covid-19 infections in the firstquarter of 2021 has led to extended lockdown measures andcontinues to weigh on the recovery in the short run

22

COVID-19 (5/9)

IFRS 9 scenarios

Macroeconomic scenariosMarch 2021

(*) Note: includes temporary layoffs rather than permanent job losses, and as such, may improve rapidly once vaccine rollout becomes better established in Ireland

(*)

Unemployment

rate


Belgium 6.2% 7.2% 8.2% 5.9% 6.9% 8.0%

Czech Republic 3.5% 3.7% 4.5% 2.8% 3.0% 4.8%

Hungary 3.9% 4.2% 5.8% 3.7% 4.0% 5.5%

Slovakia 8.5% 9.5% 10.0% 7.8% 8.0% 9.5%

Bulgaria 5.0% 5.0% 8.0% 4.3% 4.8% 7.0%

Ireland 5.5% 7.0% 14.0% 4.0% 6.0% 10.0%

2021 2022

House-price

index


Belgium 3.0% -1.0% -3.0% 2.5% 1.5% -1.0%

Czech Republic 5.0% 3.7% -1.0% 4.1% 2.4% -0.9%

Hungary 5.5% 2.0% -2.0% 6.0% 3.0% -1.0%

Slovakia 5.0% 2.0% -2.0% 4.0% 2.5% -1.0%

Bulgaria 3.0% 2.5% 2.0% 3.5% 3.2% 3.0%

Ireland 3.0% 1.0% -2.0% 4.0% 1.0% -2.0%

2021 2022

(*)

23

COVID-19 (6/9)

Steady staging of loan portfolio

• To be consistent with the approach in 2020, we updated theCovid-19 ECL (incl. management overlay) for the total loanportfolio at the end of March 2021, including the latesteconomic scenarios and changed scenario weightings

• Until now, only minor PD shifts have been observed in ourportfolio, which is reflected in stable staging percentages. Notethat any EBA-compliant payment holiday (i.e., fulfilling theconditions set in this respect, such as a maximum 9-month tenorof the payment break), does not attract a forbearance flag andaccordingly does not result in automatic staging

Total loan portfolio outstandingby IFRS 9 ECL stage*

Total loan portfolio outstandingby segment*

• Aligned with the credit risk view of our loan portfolio as reported in the quarterly financial statements

11.3%

3.2%

10.7%

1H20

11.3%

3.5%

FY19

3.4%3.3%

1Q20

11.4%

9M20

11.5%

3.3%

FY20 1Q21

11.7%

3.3%

stage 2 stage 3

40%

22%

35%

3%

Retail - mortgages

Corporate

SME

Retail - consumer finance

181bn41%

22%

34%

3%

180bn

FY20 1Q21

Coverage ratio*

44.7%

4.8%1.3%

43.4%42.0%

FY19

4.6%1.6%

45.2%

1Q20

44.8%

1H20

4.6%

9M20 FY20 1Q21

42.9%

4.7%

stage 2 stage 3

24

43

-36

-50

78

150

35

99

57

57

23

57

1211Q20

2Q20 596

-33Q20

4Q20

-491Q21

-2

845

52

-76

Management overlay

Covid-19 impact already captured by ECL models

Impairments on financial assets at AC and at FVOCI without any COVID-19 impact

Impairment on financial assets at AC and at FVOCI

Amounts in m EUR


COVID-19 (7/9)

Change in collective Covid-19 ECL, q-o-q decrease of 26m EUR

Credit Cost % (annualised) FY19 FY20 1Q21

Without collective Covid-19 ECL 0.12% 0.16% -0.11%

With collective Covid-19 ECL 0.60% -0.17%

• The updated assessment of the impact of Covid-19 on theperforming and non-performing portfolios after 3M21 (see

details in following slides), resulted in a total collective Covid-19ECL of 757m EUR (q-o-q decrease of 26m EUR) of which:▪ the ECL models captured an impact of 62m EUR,

resulting in a q-o-q decrease of 49m EUR. The decreasecan be explained by the improved forward-lookingmacroeconomic assumptions of -58m EUR, partly offsetby a Covid-19-related impact of +9m EUR following PDmigrations in stage 1 and stage 2

▪ a total management overlay of 695m EUR, with a q-o-qincrease of 23m EUR

• The total collective Covid-19 ECL of 757m EUR consists of 2%stage 1, 89% stage 2 and 9% stage 3 impairments. The higherrelative share of stage 2 and stage 3 is driven by the decreaseof 26m EUR in stage 1

• Including the collective Covid-19 ECL, the Credit Cost Ratio for3M21 amounted to -0.17%

• Note that our full year guidance for the 2021 Credit CostRatio is at the lower end of the average through-the-cycle 30-40bps

111

62

672

6951Q21 757

FY20 783

Management overlay

Covid-19 impact captured by ECL models

86% 89%

1Q219%

6% 2%

FY208%

Stage 1

Stage 3

Stage 2

Note. a negative sign means a release

25

COVID-19 (8/9)

Collective Covid-19 ECL in more detail: no changes in the classification of sector risk

• Aligned with the credit risk view of our loan portfolio as reported in the quarterly financial statements.

SME & Corporate loan portfolio* of 101bn EUR broken down by sector sensitivity to Covid-19 :

33%

25%

41%

Medium

Low

High3.4%

1.9%

5.4%

3.5%

1.5%

1.1%

2.9%

1.3%

1Q21

1.0%2.5%

Distribution(retail & wholesale)

Automotive

Services(entertainement, leisure & retirement homes)

Commercial real-estate

MetalsMachinery & heavy equipmentHotels, bars & restaurantsShipping (transportation)Building & constructionSum of other sectors < 1%

Aviation sectorAs in the previous quarter, both sectors categorised as ‘high risk’, but with a limited share of 0.3% and 0.2%, respectivelyExploration and production of

oil, gas & other fuels

Composition of ‘other sectors <1%’, of which:

• There were no changes in the sector split between high-medium-low risk compared to the previous quarter

26

COVID-19 (9/9)

Collective Covid-19 ECL in more detail : q-o-q decrease of 26m EUR

Collective Covid-19 ECL by country:

End of March'21

Optimistic Base Pessimistic Probability 1Q21 4Q20 3Q20 2Q20 1Q20

EUR m 10% 60% 30% weigthed

KBC Group 501 609 917 691 66 757 -26 -1 -5 746 43

By country:

Belgium 326 344 445 373 20 393 -20 3 -3 378 35

Czech Republic 98 141 203 155 9 164 2 -5 9 152 6

Slovakia 22 33 48 36 0 36 -1 0 -3 39 1

Hungary 25 45 79 53 0 53 -3 2 -1 54 1

Bulgaria 7 17 26 19 5 24 0 1 -5 28 n/a

Ireland 23 29 116 55 32 87 -4 -2 -2 95 n/a

Performing portfolio impact Non-

Performing

portfolio

Total

3M21

27

KBC Group

Section 3

1Q 2021 performance of business units

28

Business profile

1Q21 NET RESULT (in million euros) 380m 123m 15m 43m 22m 8m -35m

ALLOCATED CAPITAL (in billion euros) 7.2bn 1.7bn 0.6bn 0.8bn 0.4bn 0.7bn 0.2bn

LOANS (in billion euros) 104bn 29bn 9bn 5bn 4bn 10bn

BELGIUM CZECH REPUBLIC

SLOVAKIA HUNGARY BULGARIA IRELAND

DEPOSITS (in billion euros) 150bn 43bn 8bn 9bn 6bn 5bn

GROUPCENTRE

BRANCHES (end 1Q21) 456 212 174 203 175 12

Clients (end 1Q21) 3.7m 4.2m 0.8m 1.6m 1.4m 0.3m

29

Belgium BU (1): net result of 380m EUR

Net result at the Belgium Business Unit amountedto 380m EUR in 1Q21

• The quarter under review was characterised by stablenet interest income (when excluding the positive one-off in NII insurance of 5m EUR in 4Q20), higher net feeand commission income, higher trading and fair valueincome, stable net other income, an excellentcombined ratio, lower sales of life insurance products,higher operating expenses due entirely to higher banktaxes q-o-q and net impairment releases

▪ Customer deposits excluding debt certificates and repos rose by 9% y-o-y, while customer loans fell by 1% y-o-y as 1Q20 total loans was temporarilyinflated by extra corporate loan drawings as a result of the Covid-19 outbreak

204

486

396 380

1Q20 2Q20 3Q20 4Q20 1Q21

-86

NET RESULT

Amounts in m EUR

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL *** Customer deposits, including debt certificates but excluding repos. Customer deposit volumes excluding debt certificates & repos +5% q-o-q and +9% y-o-y

ORGANIC VOLUME TREND Total loans** o/w retail mortgages Customer deposits*** AuM Life reserves

Volume 104bn 39bn 150bn 203bn 26bn

Growth q-o-q* +1% +2% +11% +4% +1%

Growth y-o-y -1% +8% +9% +14% +4%

30

Belgium BU (2): stable NII and higher NIM

▪ Net interest income (626m EUR)• NII stabilised q-o-q excluding the positive one-off in NII

insurance of 5m EUR in 4Q20, due mainly to:o lower reinvestment yieldso lower number of daysfully offset by:o loan volume growtho higher margins on new loan production than on outstanding

portfolio both in the mortgage and corporate segmentso lower funding costso slightly higher netted positive impact of ALM FX swaps

• Excluding the 12m EUR positive one-off in 1Q20 due to the earlytermination of 1 large corporate file, NII only slightly fell y-o-y asthe positive impact of TLTRO3 (+17m EUR y-o-y) and of ECBdeposit tiering (+2m EUR y-o-y), higher NII on lending (bothvolume and margin driven) and a higher netted positive impactof ALM FX swaps was fully offset by the negative impact of lowerreinvestment yields

▪ Net interest margin (1.63%)• Increased by 4 bps q-o-q as higher NII on lending (both volume

and margin driven) and lower funding costs were only partlyoffset by the negative impact of lower reinvestment yields.Excluding the impact of the breakage fee in 4Q20 and timingdifferences, net interest margin rose by 3 bps q-o-q

• Fell by 5 bps y-o-y due chiefly to the negative impact of lowerreinvestment yields and an increase of the interest-bearingassets (denominator). Excluding the impact of the positive one-off in 1Q20, NIM only fell by 2 bps y-o-y

NIM**

NII Amounts in m EUR

532 536 539 521 522

99 94 12096 89

9

3Q201Q20

5 14

2Q20

1514

4Q20 1Q21

640 635673

631 626

1.63%

1Q20

1.68%

2Q20 3Q20 4Q20 1Q21

1.63% 1.63%1.59%

NII - netted positive impact of ALM FX swaps*

NII - contribution of insurance

NII - contribution of banking

* From all ALM FX swap desks** NIM is calculated excluding the dealing room and the net positive impact of ALM FX swaps & repos

31

Credit margins in Belgium

PRODUCT SPREAD ON CUSTOMER LOAN BOOK, OUTSTANDING

PRODUCT SPREAD ON NEW PRODUCTION

0.10.0

1.3

0.2

0.7

0.40.5

1.11.2

0.6

0.3

0.80.91.0

4Q17 3Q193Q18 1Q201Q15 2Q15 4Q15 3Q171Q16 2Q16 3Q16 3Q204Q16 1Q17 2Q17 1Q18 2Q18 4Q18 1Q19 2Q19 4Q19 2Q20 4Q20 1Q213Q15

Customer loans

0.1

0.7

1.5

0.9

0.2

1.21.3

0.4

1.4

0.6

0.3

0.5

0.8

1.01.1

4Q194Q183Q15 2Q161Q16 2Q19 2Q201Q15 2Q15 4Q15 3Q16 4Q16 3Q171Q17 2Q17 3Q184Q17 1Q18 2Q18 1Q19 3Q19 1Q20 4Q20 1Q213Q20

SME and corporate loans Mortgage loans

32

Belgium BU (3): higher net F&C income

▪ Net fee and commission income (327m EUR)• Increased by 14% q-o-q due mainly to:

o higher management and entry fees from mutualfunds and unit-linked life insurance products

o higher securities-related feeso higher network incomeo lower commissions paid linked to insurance salesoffset by:o lower fees from credit files & bank guaranteeso lower fees from payment services

• Rose by 6% y-o-y driven chiefly by higher managementfees, higher securities-related fees and higher networkincome, partly offset by lower entry fees, higherdistribution costs and lower fees from payment services

▪ Assets under management (203bn EUR)• Increased by 4% q-o-q due to net inflows (+1%) and a

positive price effect (+3%)

• Increased by 14% y-o-y due entirely to a positive priceeffect

AuM Amounts in bn EUR

178185 188 194

203

1Q20 1Q212Q20 3Q20 4Q20

F&C

354321 326 345

375

-46 -50 -55 -58 -48

308

1Q20 2Q20 4Q203Q20 1Q21

271 271287

327

Amounts in m EUR

F&C - contribution of insurance F&C - contribution of banking

33

▪ Sales of non-life insurance products• Rose by 3% y-o-y

• Premium growth chiefly in classes ‘Fire’, ‘General third-party liability’ and ‘Workmen’s compensation’

▪ Combined ratio amounted to an excellent 80% in1Q21 (95% in 1Q20). This is the result of 2% y-o-yearned premium growth combined with 13% y-o-ylower technical charges in 1Q21. The latter was duemainly to lower storm claims (6m EUR in 1Q21compared with 48m EUR in 1Q20) and lower normalclaims (especially in ‘Motor’, due largely to Covid-19), partly offset by higher major claims (especially in‘General third-party liability’). Furthermore, notethat ceded reinsurance result amounted to 0m EURin 1Q21, compared to a negative ceded reinsuranceresult in 1Q20

Belgium BU (4): higher y-o-y non-life sales, excellent combined ratio

COMBINED RATIO (NON-LIFE)

9M

80%

1Q

83%

1H FY

85%

95%

84%

2020 2021

NON-LIFE SALES (GROSS WRITTEN PREMIUM)

359

276263

251

369

4Q201Q20 2Q20 3Q20 1Q21

Amounts in m EUR

34

Belgium BU (5): life sales lower q-o-q, but higher y-o-y, good cross-selling ratios

▪ Sales of life insurance products• Decreased by 20% q-o-q and increased by 16% y-o-y

• The q-o-q decrease was driven by both lower sales ofguaranteed interest products (attributable chiefly totraditionally higher volumes in tax-incentivisedpension savings products in 4Q20, and the suspensionof universal single life insurance products) and unit-linked products

• The y-o-y increase was driven mainly by higher salesof unit-linked products (chiefly due to the strongperformance in Private Banking and CBC in 1Q21)

• Guaranteed interest products and unit-linkedproducts accounted for 56% and 44%, respectively, oflife insurance sales in 1Q21

▪ Mortgage-related cross-selling ratios• 93.0% for property insurance

• 83.7% for life insurance

LIFE SALES

124

282

151194 171

215

206

188

297

221

2Q201Q20 3Q20 4Q20 1Q21

339

488

338

491

392

Unit-linked productsGuaranteed interest products

Amounts in m EUR

MORTGAGE-RELATED CROSS-SELLING RATIOS

49.5%

93.0%

63.7%

83.7%

40

50

60

70

80

90

100

Property insurance Life insurance

35

▪ The q-o-q increase in net gains from financialinstruments at fair value was attributablemainly to:• a positive change in ALM derivatives

• higher dealing room & other income

• slightly higher net result on equity instruments(insurance)

partly offset by:

• lower credit and funding value adjustments due tostable counterparty credit and KBC funding spreadsin 1Q21 versus decreasing counterparty credit andKBC funding spreads in 4Q20, which more thanoffset the effect of lower derivative exposures(increasing yield curve) and higher market valueadjustments

▪ Net other income stabilised at 41m EUR in1Q21

35

45

3641 41

4Q203Q202Q201Q20 1Q21

NET OTHER INCOME

Belgium BU (6): higher FIFV and stable net other income

FIFV

23 25

-113

74

22 33

49

10

-78

-21

51

-26

2Q20

1

1Q20

-430

422

816

-217

3Q20

9

67

4Q20 1Q21

149

33

120

Net result on equity instruments (overlay insurance)

Dealing room & other income

MVA/CVA/FVA

M2M ALM derivatives

Amounts in m EUR

36

Belgium BU (7): higher opex entirely due to higher bank taxes and net impairment releases

▪ Opex without bank taxes: -4% q-o-q and -6% y-o-y• Operating expenses without bank taxes decreased by 4% q-o-q

due mainly to lower staff expenses (due largely to less FTEs anda lower accrual of variable compensation) and seasonally lowermarketing and professional fees. Note that lower depreciationsin 1Q21 offset the 11m EUR positive one-off in 4Q20 as a resultof the updated software capitalisation policy

• Operating expenses without bank taxes decreased by 6% y-o-ydue chiefly to lower staff expenses and lower marketing &facilities costs

• Adjusted for specific items, the C/I ratio (group) amounted to48% in 1Q21 (54% in FY20)

• Cost/income ratio (group): 66% in 1Q21, distorted by banktaxes

▪ Loan loss impairment releases of 62m EUR comparedwith 39m EUR loan loss impairments in 4Q20. Besides a20m EUR reversal of collective Covid-19 ECL, 1Q21 alsobenefited from impairment releases in some corporatefiles. Credit cost ratio amounted to -14 bps (21 bps inFY20) without collective Covid-19 ECL and -21 bps withcollective Covid-19 ECL in 1Q21

▪ Impaired loans ratio amounted to 2.4%, 1.2% of whichover 90 days past due

▪ 3m EUR impairment release on ‘other’ (building)

ASSET IMPAIRMENT

OPERATING EXPENSES

539 519

520 530

509

289 311

1Q211Q20

2

2Q20

828

3Q20 4Q20

521

821

81 8036

-20

28

-42

0

378

469

35

1Q20

11

-65

2Q20

2

117

-3

1Q21

44

3Q20

3

4Q20

-3

43 67

Bank tax Operating expenses


Other impairments Impairments on financial assets at AC and FVOCI

Amounts in m EUR

37

Net result at the Belgium BU

* Difference between net profit at the Belgium Business Unit and the sum of the banking and insurance contribution is accounted for by the rounding up or down of figures

CONTRIBUTION OF BANKING ACTIVITIES TO NET RESULT OF THE BELGIUM BU*

NET RESULT AT THE BELGIUM BU*

Amounts in m EUR

204

486

396 380

1Q20 2Q20 3Q20

-86

4Q20 1Q21

68

352

285 282

2Q201Q20

-55

3Q20 4Q20 1Q21

CONTRIBUTION OF INSURANCE ACTIVITIES TO NET RESULT OF THE BELGIUM BU*

74 64 6744

80 9756

64

-17 -28-11 -10

3Q20 1Q212Q20

4-32

-3

1Q20 4Q20

-30

136 134

11198

Life resultNon-Life result Non-technical & taxes

38

Czech Republic BU

Net result of 123m EUR in 1Q21▪ +29% q-o-q excluding FX effect due mainly to higher net

interest income, higher net fee & commission income,higher net results from financial instruments at fair value,higher net other income, an excellent combined ratio andnet impairment releases, partly offset by higher costs dueentirely to higher bank taxes

▪ Customer deposits (including debt certificates, butexcluding repos) rose by 10% y-o-y, while customer loansstabilised y-o-y

Highlights▪ Net interest income

• +2% q-o-q and -38% y-o-y (both excl. FX effect)

• Q-o-q increase primarily due to increasing interest rates and theappreciation of the CZK versus the EUR (+5m EUR)

▪ Net interest margin• Rose by 4 bps q-o-q due mainly to increasing interest rates,

despite pressure on mortgage margins (both on new productionand outstanding portfolio)

NET RESULT Amounts in m EUR

8877

116

94

123

1Q214Q203Q201Q20 2Q20

NII & NIM

351

235 220 206 2152.32%

2.98%

1Q20 2Q20

2.05%

4Q203Q20

1.95% 1.99%

1Q21

NIM NII

Amounts in m EUR

ORGANIC VOLUME TREND Total loans ** o/w retail mortgages Customer deposits*** AuM Life reserves

Volume 29bn 16bn 43bn 11.9bn 1.2bn

Growth q-o-q* 0% +1% +3% +5% -2%

Growth y-o-y 0% +6% +10% +20% 0%

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL*** Customer deposits, including debt certificates but excluding repos.

39

▪ Net F&C income• +7% q-o-q and -6% y-o-y (both excl. FX effect)

• The higher q-o-q net F&C income was the result of lowerdistribution costs and higher securities-related fees, partly offsetby slightly lower fees from payment services (partly seasonaleffect, partly due to stricter Covid-19 additional lockdowns)

▪ Assets under management• 11.9bn EUR

• +5% q-o-q due to a positive price effect (+3%) and net inflows(+2%)

• +20% y-o-y due to a positive price effect (+17%) and net inflows(+2%)

▪ Trading and fair value income• 2m EUR higher q-o-q net results from financial instruments at

fair value (FIFV) to 29m EUR due to higher dealing room & otherincome results and a small positive change in ALM derivatives,partly offset by a negative q-o-q change in market, credit andfunding value adjustments

▪ Insurance• Insurance premium income (gross earned premium): 121m EUR

o Non-life premium income (78m EUR) +6% y-o-y excluding FXeffect, due to growth in all products (except ‘travel’ due toCovid-19)

o Life premium income (43m EUR) -29% q-o-q and -17% y-o-y,excluding FX effect, both due mainly to lower sales of unit-linked products

• Combined ratio of 83% in 1Q21 (87% in FY20)

CROSS-SELLING RATIOS

Mortg. & prop. Mortg. & life risk Cons.fin. & life risk

20212020

60%44%

2019 2020

63%63%

2020

49%

2019

46%

2021

54% 47%

2019

47%

2021

F&CAmounts in m EUR

5551 52

4650

1Q20 2Q20 3Q20 4Q20 1Q21

Czech Republic BU

40

▪ Operating expenses• 225m EUR; -9% q-o-q and -2% y-o-y, both excluding FX

effect and bank taxeso Q-o-q decrease was due mainly to:o lower staff expenseso seasonally lower marketing costso the updated software capitalisation policy in 4Q20

(which led to a 4m EUR negative one-off in 4Q20)o Y-o-y decrease was chiefly the result of lower staff costs,

lower facilities expenses and lower marketing, travel &event costs, partly offset by higher ICT costs

• Adjusted for specific items, C/I ratio amounted to roughly53% in 1Q21 (52% in FY20)

▪ Loan loss and other impairment• Loan loss impairment releases (mainly thanks to some

corporate files, partly offset by higher collective Covid-19ECL (2m EUR additionally in 1Q21 versus 5m EUR reversal in4Q20)

• Credit cost ratio amounted to -0.19% (0.15% in FY20)without collective Covid-19 ECL and -0.16% with collectiveCovid-19 ECL in 1Q21

• Impaired loans ratio improved to 2.2%, 1.0% of which over90 days past due

• Impairment of 1m EUR on ‘other’

OPERATING EXPENSES

181

164179 187

174

41 50

1Q211Q20 2Q20 3Q20 4Q20

221 225

Bank tax Operating expenses

Amounts in m EUR

Czech Republic BU

ASSET IMPAIRMENT

18 22

-15

9

2

-12

7

152

1Q20

16

5

2Q20

3

6

4Q203Q20

9

-512

1Q21

175

18

24

Other impairments


Impairments on financial assets at AC and FVOCI

Amounts in m EUR

41

International Markets BU

ORGANIC VOLUME TREND Total loans ** o/w retail mortgages Customer deposits*** AuM Life reserves

Volume 28bn 17bn 27bn 6.0bn 0.6bn

Growth q-o-q* +1% +1% -2% +4% 0%

Growth y-o-y +7% +8% +14% +20% +3%

NET RESULTAmounts in m EUR

1633 25 1510

14

5138

43

12

-70

25

10

27

22

88

3Q201Q20

13

2Q20

4

4Q20

-6

86

-3

835

1Q21

-45

123

Net result of 88m EUR

▪ Slovakia 15m EUR, Hungary 43m EUR, Bulgaria 22mEUR and Ireland 8m EUR

Highlights (q-o-q results)▪ Higher net interest income. NIM 2.56% in 1Q21 (-3 bps q-o-q

and -5 bps y-o-y)▪ Lower net fee and commission income▪ Lower result from financial instruments at fair value▪ Higher net other income▪ An excellent combined ratio of 78% (84% in FY20)

▪ Higher non-life and life insurance sales▪ Higher costs due partly to higher bank taxes▪ No impairment charges (compared with impairment charges in

4Q20)

Bulgaria SlovakiaIreland Hungary

* Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL*** Customer deposits, including debt certificates but excluding repos.

42

International Markets BU - Slovakia

Net result of 15m EUR (of which -2m EUR of OTP SK,consolidated in P&L as of 2021)

Highlights (q-o-q results)▪ Higher net interest income thanks entirely to the contribution

of OTP SK▪ Higher net fee & commission income mainly as a result of the

contribution of OTP SK (+2m EUR) and lower distribution costs▪ Lower result from financial instruments at fair value▪ Stable net other income▪ Excellent combined ratio of 85% (82% in FY20)▪ Higher non-life insurance sales and stable life insurance sales▪ Higher operating expenses due mainly to the consolidation of

OTP SK as of 1Q21 (+8m EUR) and higher bank taxes (+5m EUR)

▪ Small net loan loss impairment charges (-3m EUR, mainly OTPSK impact) compared to small net loan loss impairmentreleases in 4Q20. Credit cost ratio of 0.15% (0.19% in FY20)without collective Covid-19 ECL and 0.13% with collectiveCovid-19 ECL in 1Q21

Volume trend▪ Total customer loans rose by 1% q-o-q and by 6% y-o-y, the

latter due almost entirely to the increasing mortgage portfolio▪ Total customer deposits fell by 5% q-o-q (mainly due to

decreasing corporate and term deposits) and rose by 14% y-o-y

ORGANIC VOLUME TREND

Total loans **

o/w retail mortgages

Customerdeposits***

Volume 9bn 5bn 8bn

Growth q-o-q* +1% +2% -5%

Growth y-o-y +6% +14% +14%


4

-6

33

25

17

-2

3Q20 4Q202Q201Q20 1Q21

15

• Non-annualised ** Loans to customers, excluding reverse repos (and bonds). Growth figures are excluding FX, consolidation adjustments, reclassifications and collective Covid-19 ECL *** Customer deposits, including debt certificates but excluding repos.

OTP SK contribution CSOB SK contribution

43

International Markets BU - Hungary


10

16

51

38

43

1Q20 1Q20214Q202Q20 3Q20


Total loans **


Customer deposits***

Volume 5bn 2bn 9bn

Growth q-o-q* +2% +3% -3%

Growth y-o-y +14% +14% +19%


Highlights (q-o-q results)▪ Higher net interest income excluding FX effect due chiefly to loan

volume growth in retail segment

▪ Lower net fee and commission income excluding FX effect, duemainly to seasonally lower fees from payment services

▪ Lower net results from financial instruments at fair value▪ Excellent combined ratio of 78% (86% in FY20)▪ Higher non-life insurance sales and stable life insurance sales▪ Higher operating expenses due entirely to higher bank taxes.

Operating costs excluding bank taxes decreased due mainly tolower staff and facilities expenses

▪ Net loan loss impairment releases in 1Q21 (compared with loanloss impairment charges in 4Q20) in retail segment and a 2m EURreversal of collective Covid-19 ECL (versus 2m EUR additionalcollective Covid-19 ECL in 4Q20). Credit cost ratio of 0.01%(0.05% in FY20) without collective Covid-19 ECL and -0.19% withcollective Covid-19 ECL in 1Q21

Volume trend▪ Total customer loans rose by 2% q-o-q and by 14% y-o-y, the

latter due mainly to consumer finance (baby boom loans) andmortgage loans

▪ Total customer deposits fell by 3% q-o-q (mainly due to decreasing corporate & SME deposits) and rose by 19% y-o-y (due to growth in all segments)


44

International Markets BU - Bulgaria


10

14

2725

22

1Q20 3Q202Q20 4Q20 1Q21


Total loans **



Volume 4bn 1bn 6bn

Growth q-o-q* +1% +1% +2%

Growth y-o-y +11% +13% +24%


Highlights (q-o-q results)

▪ Lower net interest income mainly due to margin pressure

▪ Lower net fee and commission income as higher entry fees andnetwork income was more than offset by seasonally lower feesfrom credit files & bank guarantees, seasonally lower fees frompayment services and higher distribution costs

▪ Excellent combined ratio at 76% (82% in FY20)

▪ Lower non-life insurance sales and higher life insurance sales

▪ Higher operating expenses due entirely to higher bank taxes.

Operating costs excluding bank taxes decreased due mainly tolower staff expenses

▪ Small net loan loss impairment releases both in 1Q21 (incorporate segment) and 4Q20. Credit cost ratio of -0.08% (0.07%in FY20) without collective Covid-19 ECL and -0.08% withcollective Covid-19 ECL in 1Q21

Volume trend:▪ Total customer loans +1% q-o-q and +11% y-o-y, the latter due to

growth in all segments▪ Total customer loans: new bank portfolio +1% q-o-q and +12%

y-o-y, while legacy -6% q-o-q and -17% y-o-y▪ Total customer deposits increased by 2% q-o-q and by 24% y-o-y

(the latter due to growth in all segments)


45

International Markets BU - Ireland

NET RESULT Amounts in m EUR12 13

-3

8

4Q203Q202Q201Q20 1Q21

-70


Total loans **



Volume 10bn 10bn 5bn

Growth q-o-q* +1% +1% -2%

Growth y-o-y +4% +4% -1%


Highlights (q-o-q results)▪ Lower net interest income due largely to the recognition of a

prior year interest adjustment▪ Higher net other income as 4Q20 was affected by a 3m EUR

additional impact of the tracker mortgage review▪ Lower expenses due entirely to lower bank taxes. Operating

expenses without bank taxes increased q-o-q due mainly tohigher ICT costs and higher depreciations

▪ 0m EUR net impairment release in 1Q21 compared with 4mEUR net impairment releases in 4Q20. Credit cost ratio of

0.17% (-0.01% in FY20) without collective Covid-19 ECL and0.01% with collective Covid-19 ECL in 1Q21

Volume trend▪ Total customer loans rose by 1% q-o-q and by 4% y-o-y driven

by new production of fixed rate mortgages▪ Total customer deposits decreased by 2% q-o-q and by 1% y-o-y

as the increase in retail deposits was more than offset by the deliberate decrease in the more expensive corporate and credit union deposits


46

Group Centre

Net result of -35m EUR

The net result for the Group Centre comprises the resultsfrom activities and/or decisions specifically made forgroup purposes (see table below for components)

Highlights (q-o-q results)The small q-o-q improvement was attributable mainly to:▪ lower costs▪ small net impairment reversal (versus impairment charges in

4Q20 due to one-off software impairments)▪ higher non-life insurance before reinsurancepartly offset by:▪ lower net results from financial instruments at fair value due

entirely to a negative change in M2M ALM derivatives▪ lower net interest income due largely to lower returns on the

ALM bond portfolio and higher subordination costs

NET RESULT

Amounts in m EUR

4Q20 1Q211Q20 2Q20 3Q20

-43

-26-28

-38

-35

Amounts in m EUR

BREAKDOWN OF NET RESULT AT GROUP CENTRE 1Q20 2Q20 3Q20 4Q20 1Q21

Group item (ongoing business) -46 -25 -24 -39 -34

Operating expenses of group activities -15 -18 -20 -42 -16

Capital and treasury management -11 -6 1 -4 -4

Holding of participations -3 -1 2 -1 1

Group Re 7 3 3 6 18

Other -25 -3 -10 3 -33

Ongoing results of divestments and companies in run-down 3 -1 -4 0 0

Total -43 -26 -28 -38 -35

47

Overview of contribution of business units to 1Q21 result

NET PROFIT – BELGIUM NET PROFIT – CZECH REPUBLIC

301 243 176

380

2019

1,274

20182017

1,087

1,2071,168

-86

1,575

2020 2021

1,4501,344

1,001

1Q21 ROAC: 21%

Amounts in m EUR

181 171 17788

123

521 483612

287

20192017 20202018 2021

789702

654

375

1Q21 ROAC: 28%

NET PROFIT – INTERNATIONAL MARKETS

114 13770

88

330396

309

164

444

199

202020192017 2018

533

35

2021

379

1Q21 ROAC: 14%

2Q-4Q 1Q 2Q-4Q 1Q 2Q-4Q 1Q

NET PROFIT – KBC GROUP

630 556 430

557

-5

1,9452,059

2017

1,445

2,014

2018 2019 2020 2021

2,575 2,570 2,489

1,440

1Q21 ROAC: 19%

2Q-4Q 1Q

48

Y-O-Y ORGANIC* VOLUME GROWTH

4%

BE

* Volume growth excluding FX effects, divestments/acquisitions and collective Covid-19 ECL** Loans to customers, excluding reverse repos (and bonds)*** Customer deposits, including debt certificates but excluding repos**** Total customer loans in Bulgaria: new bank portfolio +12% y-o-y, while legacy -17% y-o-y

Loans**

8%

Retail mortgages

Deposits***

-1%

9%

Retail mortgages

Loans** Deposits***

0%

6%

10% 11%

Loans**** Retail mortgages

Deposits***

13%

24%

14%

Deposits***

6%

Loans**

14%

Retail mortgages

14%

Loans** Retail mortgages

Deposits***

19%

14%

Retail mortgages

Loans** Deposits***

4%

-1%

4%

Deposits***Retail mortgages

Loans**

10%

1%

8%

Balance sheet:Loans and deposits continue to grow in most countries

CR

49

KBC Group

Section 4

Strong solvency andsolid liquidity

50

* No IFRS interim profit recognition given the more stringent ECB approach

Strong capital position (1)

Fully loaded Basel 3 CET1 ratio at KBC Group (Danish Compromise)

10.34% MDA

16.6%

1H20

16.3%

1Q20 9M20 FY20

16.6%

1Q21

17.6% 17.6%

▪ The fully loaded common equity ratiostabilised q-o-q at 17.6% at the end of 1Q21based on the Danish Compromise

▪ KBC’s CET1 ratio of 17.6% at the end of 1Q21represents a solid capital buffer:• 9.7% capital buffer compared with the current

theoretical minimum capital requirement of7.95% (as a result of the announced ECB andNational Bank measures which providedsignificant temporary relief on the minimumcapital requirements)

• 7.3% capital buffer compared with theMaximum Distributable Amount (MDA) of10.34% (given small shortfall in AT1 bucket)

• 7.2% capital buffer compared with the OverallCapital Requirement (OCR) of 10.45% (which stillincludes the 2.50% capital conservation buffer ontop of the 7.95%)

▪ At the end of 1Q21, the impact of theapplication of the transitional measuresresulted in a positive impact on CET1 ratio of51 bps compared to fully loaded (transitionalCET1 ratio amounted to 18.1% at the end of1Q21)

**

*

7.95% theoretical regulatory minimum

10.45% OCR

*

*

51

Strong capital position (2)

Fully loaded Basel 3 total capital ratio (Danish Compromise)

▪ The fully loaded total capital ratiostabilised q-o-q at 21.2% at the end of1Q21

* No IFRS interim profit recognition given more stringent ECB approach

1.5% AT1

16.6% CET1

1.5% AT1

16.3% CET1

1Q20

1.8% T21.9% T2

1.5% AT1

1.8% T2

1H20

1.5% AT1

16.6% CET1

9M20

2.1% T2

17.6% CET1

FY20

19.7% 19.8% 19.8%21.2%

1Q21

21.2%

17.6% CET1

1.5% AT1

2.1% T2* ** * *

*

52

Fully loaded Basel 3 leverage ratio and Solvency II ratio

FY201Q20 9M201H20 1Q21

4.8%5.2%

4.8%5.2%

4.7%

Fully loaded Basel 3 leverage ratio at KBC BankFully loaded Basel 3 leverage ratio at KBC Group

6.0%

9M201Q20 1H20 FY20 1Q21

6.5%5.9%

6.4%5.8%

Solvency II ratio

FY20 1Q21

Solvency II ratio 222% 235%

▪ The q-o-q delta in the Solvency II ratio was mainlydriven by an increase of the interest rates combinedwith a steepening of the yield curve


**

* **


**

*

*

▪ The decrease of the leverage ratio was mainly the result of increased short-term money market and repoopportunities

53

Strong and growing customer funding base with liquidity ratios remaining very strong

65% customer

driven

* Net Stable Funding Ratio (NSFR) is based on KBC Bank’s interpretation of the proposal of CRR amendment.** Liquidity Coverage ratio (LCR) is based on the Delegated Act requirements. From EOY2017 onwards, KBCBank discloses 12 months average LCR in accordance to EBA guidelines on LCR disclosure.

Ratios FY20 1Q21 Regulatory requirement

NSFR* 146% 148% ≥100%

LCR** 147% 157% ≥100%

▪ NSFR is at 148% and LCR is at 157% by the end of 1Q21

• Both ratios were well above the regulatory requirement of 100% due

to a strong growth in customer funding and the participation to

TLTRO III

FY15

11%

7%

6%

1%

71%

8%

70%

8%

13%

3%

10%

4%

69%

8%

8%

7%

65%63%

FY16

2%

8%

9%

10%

63%

FY17

7%

6%

8%

FY18

8%

72%

1%7%

8%

5%

6% 1%

FY19

4%8%

13%9%

1Q21

2%

FY20

6%4%

Interbank Funding Debt issues placed at institutional relations

Secured Funding Total Equity

Certificates of deposit

Funding from Customers

Government and PSE

Mid-cap

Retail and SME5%

12%

83%

▪ KBC Bank continues to have a strong retail/mid-cap deposit base in its core markets – resulting in a stable funding mix with a significant portion of the fundingattracted from core customer segments and markets

▪ Drop in % customer funding as growth in interbank/CD/secured funding was even outpacing growth in customer funding – monetising several short-term moneymarket and repo opportunities

▪ KBC Bank participated to the TLTRO III.7 transaction for an amount of 2.2bn EUR in March 2021 (bringing the total TLTRO exposure to 24.2bn EUR), which is reflectedin the ‘Interbank Funding’ item below

139.560 143.690 155.774 163.824 176.045192.970 199.162

FY15 FY16 FY17 FY18 FY19 FY20 1Q21

Funding from customers (m EUR) of KBC Banking Group

54

KBC Group

Section 5

Looking forward

55

Looking forward

➢ The recent pandemic waves continue to hold most of the continental European countries firmly intheir grip. In particular the circulation of more infectious and dangerous virus strains is puttingpressure on health systems again, necessitating the extension or introduction of strict lockdownpolicy measures in many countries. Substantial progress in the health situation can only beexpected as the ongoing vaccination campaigns make further progress. The impact of thevaccination programmes on the economic recovery will probably become increasingly visible in thesecond half of 2021 as the economies gradually reopen. Therefore, we expect European economicgrowth to accelerate in the second half of 2021 and the level of European economic activity toreturn to its pre-pandemic level in the course of 2022

Economicoutlook

Group guidancefor 2021

➢ Our FY21 guidance for NII and opex excluding bank taxes remains unchanged:➢ FY21 NII guidance of 4.3bn EUR ballpark figure➢ FY21 opex excluding bank taxes +2% y-o-y like-for-like (excluding the impact of the OTP SK

acquisition) as some cost savings announced in 2020 (actions immediately taken after firstlockdown in March 2020) are not sustainable in 2021 and cost savings from our digital firststrategy are rather back-end loaded.

➢ The Credit Cost Ratio (CCR) for FY21 is expected to be in line with the low end of our averagethrough-the-cycle CCR (of 30 - 40bps) instead of the high end

56

Differently: the next levelLong-term financial guidance

Long-term financial guidanceCAGR total income (‘20-’23) + 2% by 2023

CAGR OPEX excl. bank taxes (’20-’23) + 1% by 2023

Combined ratio ≤ 92% by 2023

Common equity ratio* 14.5%, with a management buffer of 1% on top of as of now

** Excluding Pillar 2 guidance of 100 bps

*** The SRB communicated the new draft MREL targets (under BRRD2) in % of RWA and in % of LRE to KBC. Final confirmation letter expected shortly.Regarding MREL as a % of RWA; (i) an intermediate MREL target of 21.63% as from 01-01-2022 and (ii) a final MREL target of 22.13% as from 01-01-2024. The Combined Buffer Requirement needs to be met on top of the MREL target as a % of RWA

* Fully loaded, Danish Compromise

Regulatory requirements

Overall capital requirement (OCR)** ≥ 10.45% by 2021

MREL as a % of RWA*** ≥ 21.63% by 2022

MREL as a % of LRE*** ≥ 7.34% by 2022

NSFR ≥ 100% as of now

LCR ≥ 100% as of now

57

Differently: the next levelDigital investment 2021-2023

OPEX excl. bank taxes

8%

92%

Other Digital first

11%

89%

CAGR (20-23) =

+1%

Forecast Cashflow only digital first strategy2021-2023 = 1.4bn EUR

Forecast OPEX only digital first strategy2021-2023 = 1.1bn EUR

505

420

472

2021

2022

2023

348

406

2021

2022

2023

385

Amounts in m EUR

2020 2023

58

Differently: the next levelDividend policy & capital distribution: unchanged guidance

• In calendar year 2021, KBC has the intention to pay out 3.44 EUR gross DPS in total:• For the accounting year 2020, a gross DPS of 0.44 EUR was approved at the AGM and will be paid out on 19 May 2021• It is the intention of the Board of Directors of KBC Group to distribute an extra DPS of 2.0 EUR over the accounting year

2020 in 4Q21. The final decision of the Board of Directors is subject to restrictions on dividends being lifted by the ECB• an interim DPS of 1 EUR as an advance of the total dividend for the accounting year 2021, paid out in November 2021

• KBC’s pre-Basel IV capital deployment plan implies that:• We aim to be amongst the better capitalised financial institutions in Europe• On top of the payout ratio of at least 50% of consolidated profit, all capital > 15.5% (the current reference capital position

of 14.5% + the current 1% management buffer) will be considered for distribution to the shareholders. Each year, theBoard of Directors will take this decision at its discretion when announcing the full year results (next FY results on 10February 2022)

• Current capital deployment plan gives much more flexibility to our Board of Directors than in the past:• In line with the potential evolutions of our peers’ CET1 ratio, our BoD can adjust accordingly the current reference

capital position of 14.5% at its discretion• the BoD has the flexibility to lower the 1% management buffer at its discretion e.g. in case of an acquisition or in

case of buoyant market circumstances• From the moment Basel IV will apply, the capital deployment plan will be updated (as from 1 January 2023 at the

earliest… but according to rumours, rather from 1 January 2024)

59

KBC Group

Annex 1

Company profile

60

KBC Group in a nutshell (1)

✓We want to be among Europe’s best performing financial institutions! By achieving this, KBC wants to become the reference in bank-insurance in its core markets

• We are a leading European financial group with a focus on providing bank-insurance products and services toretail, SME and mid-cap clients, in our core countries: Belgium, Czech Republic, Slovakia, Hungary, Bulgaria andIreland

✓Diversified and strong business performance

… geographically• Mature markets (BE, CZ, IRL) versus developing markets (SK, HU, BG)• Economies of BE & 4 CEE-countries highly oriented towards Germany, while IRL is more oriented to the UK & US• Robust market position in all key markets & strong trends in loan and deposit growth

… and from a business point of view• An integrated bank-insurer• Strongly developed & tailored AM business• Strong value creator with good operational

results through the cycle• Unique selling proposition: in-depth

knowledge of local markets and profound relationships with clients

• Integrated model creates cost synergies and resultsin a complementary & optimised product offering

• Broadening ‘one-stop shop’ offering to our clients

Diversification Synergy

Customer Centricity

53% 52% 53%

47% 48% 47%

20202018 2019

KBC Group: topline diversification 2018-2020 (in %)

Other income Net interest income

61

✓High profitability

FY20

Net result

1440mEUR57% 85%

C/I ratio* Combined ratio

FY19

2489m

EUR57% 90%

CET1 generation (in bps) before any deployment

193

296 277 279 271 251

141

2014 20172015 202020192016 2018

146%

NSFR

147%

LCR

136% 138%

✓… and robust liquidity positions

FY20

FY19

KBC Group in a nutshell (2)

* 11% when adjusted for the collective covid-19 impairments

ROE (%)

14

2218 17 16

14

8

20202014 2015 20172016 2018 2019

*

*

* 202bps when adjusted for the collective covid-19 impairments

✓Solid capital position...

Fully loaded Basel 3 CET1 ratio of KBC Group (Danish Compromise)

1H201Q20 9M20

16.3%

FY20

16.6% 16.6% 17.6%**


7.95% theoretical regulatory minimum

*

10.35% Maximum Distributable Amount

* Adjusted for specific items

62

Market share (end 2020) BE CZ SK HU BG IRL

Loans and deposits

Investment funds

Life insurance

Non-life insurance

Well-defined core markets

GDP growth: KBC data, March ‘21* Retail segment

19% 21%12% 11% 8%10%

28%18%

23%13%12%

8%

28%

3%13%

3%

9% 8%4%9% 10%

Real GDP growth BE CZ SK HU BG IRL

% of Assets

2020

2021e

2022e

3%

63%

20%3% 3% 2%

-5.2% -3.8%-6.3% -5.6% -5.1%

3.4%

3.5%4.1% 3.0%4.2% 4.2% 5.0%

IRELAND

BELGIUM

CZECH REP

SLOVAKIA

HUNGARY

BULGARIA

*

3.7m clients456 branches104bn EUR loans150bn EUR dep.





1.4m clients175 branches4bn EUR loans6bn EUR dep.Belgium

Business Unit

CzechRepublicBusiness Unit

InternationalMarkets Business Unit

4.2%4.0% 4.0%5.0% 4.0%4.6%

63

Business profile

▪ KBC is a leading player (providing bank-insurance products and services to retail, SME and mid-cap clients) in Belgium, the Czech Republic and its 4 core countries in the International Markets Business Unit

BREAKDOWN OF ALLOCATED CAPITAL (FULLY LOADED) BY BUSINESS UNIT AS AT 31 MARCH 2021

62%

15%

22%

2%

Belgium

Czech Republic

International Markets

Group Centre

64

Shareholder structure

▪ Roughly 40% of KBC shares are owned by a syndicate of core shareholders, providing continuity to pursue long-termstrategic goals. Committed shareholders include the Cera/KBC Ancora Group (co-operative investment company),the Belgian farmers’ association (MRBB) and a group of Belgian industrialist families

▪ The free float is held mainly by a large variety of international institutional investors

SHAREHOLDER STRUCTURE AT END 1Q21

18.6%

Other core

KBC Ancora

2.7%

Cera 11.5%7.3%

MRBB

59.9%

Free float

65

KBC Group

Annex 2

Differently: the next level

66

, your digital assistant

The interaction between the customer and Kate will be triggered by data analysis (approval

granted by customer). Kate will be trained on the basis of the customer’s

profile, preferences and activities

PERSONALISED & DATA DRIVEN

Kate will only propose offers where sufficient added value is shown or when she can serve the

client in an important moment in the client's live

RELEVANT & VALUABLE OFFER

Lead journeys driven by time or location are preferably taken care of by Kate, as

notifications linked to a specific location or specifying moment in time are perceived as

highly personal

AT THE RIGHT TIME

We will offer the client a frictionless End2End digital process and in doing so

make bank/insurance simple and hassle free

DIGITAL FIRST & E2E

Kate will help the client saving time and/or money, focusing more on the convenience

factor. Kate will also serve the client regarding security and fraud

SERVING: SECURE & FRICTIONLESS

We want all our clients to meet Kate as much as possible. Kate will allow us to reach out to a

sufficient volume of clients, in terms of transactions and in terms of number of

targetable audience

VOLUME

‘No hassle, no friction, zero

delay’ Johan Thijs

Hyper personalised and trusted financial digital assistant

67

LEVEL 4: Fully automated lead life cycle management

LEVEL 3: AI-powered lead life cycle management

LEVEL 1: Basic lead management

LEVEL 2: Lead life cycle management

DA

TAD

RIV

ENSO

LUTI

ON

DR

IVEN

Exp

on

enti

al c

on

vers

ion

rat

e

Digital lead management: From data driven to solution driven


68

+

+

The strong basis remains


69

PerformancePerformance

Powered by PEARL+

‘Why would youbuild exactly

the same thingin your country, when you have

the solution next door?’

Johan Thijs


70

Bank-insurance+


71


Monitored through the KBC performance diamond

PROFIT

CAPITAL

LIQUIDITY

STAKE-HOLDERS

NET PROFIT

CAPITAL

LIQUIDITY

Clients, staff, society, shareholdersSTAKEHOLDERS

The performance diamond defines, within the limits of the risk management framework, the targets for KBC Group and for all the business units for 4 performance dimensions:

72

From key priorities to operational targets

KEY PRIORITIE

S

No hassle, no frills, zero-delay customer experience

Proactive personalizedfinancial solutions via DATA

and AI

Re-design & automation of all processes

Bank-insurance+

Digital lead management: from data driven to solution

driven

Group-wide collaboration

Maximizecustomer

experience

Go forDigital first

Furtherenhance

bank-insurance

Outperformon

operationalefficiency

DATA DRIVEN

CUSTOMER NPS RANKING

STPSCORE

% BANK-INSURANCE CUSTOMERS

% DIGITAL SALES

Differently: the next levelTranslating strategy into non-financial targets

73

Introducing 4 new operational targets (1)


➢ Target is to remain the reference (top-2 score on group level)

Based on weighted avg of ranking in six core countries

➢ ≥85% of active customers to be BI customers➢ ≥27% of active customers to be stable BI customers

BI customers have at least 1 bank + 1 insurance product of our group. Stable BI customers: at least 2 bank + 2 insurance products (Belgium: 3+3)

Top-2 Top-2

2020* target '23

Customer NPS ranking

78% 85%

22% 27%

2020 BI target '23 2020 stable BI target '23

% bank-insurance (BI) clients

* Based on the latest available data.

74

Introducing 4 new operational targets (2)

* Based on analysis of core commercial products.


➢ STP ≥60% and STP potential ≥80%

The STP-ratio measures how many of the services that can be offered digitally are processed without any human intervention and this from the moment of interaction by a client until the final approval by KBC.

STP potential measures what the STP-ratio would be if KBC would only have the digital channel in its interaction with clients for a given process or product.

➢ Digital sales ≥40% of bank sales➢ Digital sales ≥25% of insurance sales

Based on weighed avg of selected core products

25%

60%41%

80%

2020STP

target '23 2020STP

potential

target '23

STP score*(straight through processing)

32%40%

15%

25%

2020bank

target '23 2020insurance

target '23

% digital sales(bank / insurance)

75

Our sustainability strategyThe cornerstones of our sustainability strategy and our commitment to the United Nations Sustainable Development Goals

Incr

eas

ing

ou

r p

osi

tive

imp

act We are focusing on areas in which we, as a bank-insurer, can

create added value: financial literacy, entrepreneurship,environmental awareness and longevity and/or health. Indoing so, we take into account the local context of ourdifferent home markets. Furthermore, we also support socialprojects that are closely aligned with our policy.

Lim

itin

g o

ur

adve

rse

imp

act We apply strict sustainability rules to our business activities

in respect of human rights, the environment, business ethicsand sensitive or controversial social themes. In the light ofconstantly changing societal expectations and concerns, wereview and update our sustainability policies at least everytwo years.

Re

spo

nsi

ble

be

hav

iou

r Responsible behaviour is especially relevant for a bank-insurer when it comes to appropriate advice and sales.Therefore, we pay particular attention to training (includingtesting) and awareness. For that reason, responsiblebehaviour is also a theme at the KBC University, our seniormanagement training programme, in which the theory istaught and practised using concrete situations. Seniormanagers are then tasked with disseminating it throughoutthe organisation.

76

Our sustainability governanceSustainability embedded in our organization

▪ Top level responsibility for sustainability and climate strategy• The Executive committee has the highest level of direct responsibility for

sustainability and climate change and reports on it to the Board ofDirectors

• Direct responsibility of the Group CEO and Group CFO for sustainabilityand climate as chairman in the different governance bodies

▪ Nomination of country coordinators in all our core markets to effectivelyimplement centrally-decided strategies, senior representation of all corecountries in Internal Sustainability Board.

▪ Specific Sustainable Finance Programme to integrate our policy on climatechange and climate action plan within the group

▪ External advisory boards to advise and challenge us on our sustainable strategy

▪ Sustainability integrated into our remuneration policy:• The variable remuneration of Executive Committee members is linked to -

amongst others - progress made in the area of sustainability. The Board ofDirectors, through its Remuneration Committee, assesses the criteria forevaluating the members of the Executive Committee in this respect

• At least 10% of the variable remuneration received by senior managementdepends on the achievement of individual targets agreed in advance aspart of the group’s sustainability strategy, including our climate policy

• The non-recurrent results-based bonus KBC pays its employees in Belgiumhas been partially linked to our direct footprint target – reducing paperconsumption – but also to employee development (training days, digitalityand progress management) and to cybersecurity (phishing tests)

77

Our ESG ratings:

Latest Score(End of April 2021)

CDP A - Leadership

FTSE4Good 4.7/5

ISS ESG C Prime

MSCI AAA

Sustainalytics Low Risk (16.0): 4th percentile of 388 diversified banks (risk view)

S&P Global -RobecoSAM

85th percentile of 253 banks assessed (within top 15%)

Vigeo Eiris Not publicly available

Our sustainability ambitionsWe substantially raise the bar for our climate-related ambitions

➢ Almost doubling of SRI funds by ’25 (vs 2020)➢ SRI funds ≥ 50% of new fund production by ’21➢ During 2021 KBC will re-evaluate this target and its

definition of SRI funds in line with the new EU Sustainable Finance Disclosure Regulation (SFDR).

➢ Target raised from 50% to 65% by ‘30

➢ Target raised from 90% to 100% by ‘30 ➢ Target reduction of own emissions raised from 65% to 80% by ‘30

➢ KBC will achieve full climate neutrality as of the end of 2021 by offsetting the balance

912

17 19

30

1Q2120192018 2020 target’25

61%

2018 20202019

57%

target’30

44%

65%

Volume of SRI Funds(In billions of EUR)

Renewable energy loans(In % of total energy-sector loan portfolio)

252

86

34 3611

2016 2017 20202018 2019 1Q21 2021

2

Direct coal-related finance(In millions of EUR)

➢ Proven track record in building down direct coal exposure ➢ Firm commitment to exit coal, supporting existing clients

in their transition. In order to remain eligible for any kind of financing, the related client must commit not to engage into any new coal project and must submit a coal-phase-out plan

Green electricity(In % of own electricity consumption)

20202018 2019

78%

target’30

83% 87%100%

Reduction own GHG emissions (incl. commuter travel)(In % compared to 2015)

38%

32% 42%

2018 2019

56%80%

2020

50%63%

Full Exit

Target’30(incl. commuter travel)

Excl. commuter

Incl. commuter

78

Sustainable financeOur commitment to contribute to a sustainable society

Sustainable finance (*)(KBC Group, in millions of euros)

2019 2020

Green finance

Renewable energy and biofuel sector 1 768 1 840

Green mortgages* 8 817

Social finance

Health care sector 5 783 6 085

Education sector 975 1 031

Socially Responsible Investments

SRI funds under distribution 12 016 16 780

Total 20 542 34 553

For the sustainability report of 2020, we refer to the KBC.COM website

(*) from 2020 we extended the overview with the green mortgage volumes of Belgium, Czech Republic, Slovakia and Ireland. This amount covers newly built houses and apartments of our outstanding mortgage loans with energy labels A and B (based on the EU’s Energy Performance of Buildings Directive)

Green products and business solutions :▪ Business solutions to promote energy efficiency in buildings, industrial processes

and mobility, e.g.: programmes to help companies prepare for energy audits and a sustainable transition, EIB loan for SMEs to finance climate-improving investments at discounted interest rate, green car loan and lease products, bicycle leasing, mobility services through mobile apps, etc.

▪ Regarding social finance we have specific departments that guide social profit institutions and local authorities in areas such as payments, asset management and financing solutions

▪ SRI as a key focus area of our sustainability strategy: ▪ Belgian Towards Sustainability quality label for all our SRI funds▪ Clear targets: volume of SRI and % of new production (first offer and preferred

investment solution)▪ Strict exclusion criteria on top of general exclusion policies for conventional funds▪ Positive impact by investing in companies and countries that score well on

sustainability▪ SRI Advisory Board = external panel of independent experts

79

Our sustainability strategyOur commitment to the climate, following the ‘double materiality’ approach

ENVIRONMENTAL & SOCIAL MATERIALITY

Committed to manage the direct and indirect impact of our companyon climate

▪ Direct environmental impact through our own operations▪ Indirect impact on the climate through financing, investing and insuring

other parties who could have a direct impact on the climate

FINANCIAL MATERIALITY*

Committed to manage the impact of climate change on our company

▪ Impact on our business as a financial institution, in the shape of both transition and physical risks and opportunities arising from climate change

Climate change impact on company

Company impact on climate

Company impact on climatecan be financially material

* Financial materiality is used here in the broad sense of affecting the value of the company, notjust in the sense of affecting financial measures recognised in the financial statements.

▪ We are committed to manage our direct environmental impact and we have substantially raised our ambitions in relation to our direct environmental footprint

▪ We apply strict sustainability policies with respect to human rights, environment, climate and biodiversity, business ethics and sensitive/ controversial societal issues. KBCs sustainability policies are regularly reviewed, i.e. at least every two years or more frequently if necessary, and challenged by independent experts in various domains (External Sustainability Board)

▪ Updated strategies on the most carbon-intensive industrials sectors and product-lines (5 out of 11 assessed in 2020) of our lending book. First results and new & updated targets where relevant are presented in so-called white papers for the energy, commercial real estate and agriculture sectors, as well as for the following product lines: mortgage loans and carleasing

▪ Ongoing methodological tracks to understand the potential financial impact of climate-related transition risks on our lending and investment activities and implement new measuring instruments. Based on these methodologies, KBC will be able to publish clear quantitative targets by the end of 2022, in line with the Paris Agreement

▪ We report on our ongoing climate actions in accordance with the four pillars of the TCFD Framework and in line with our commitment to the Collective Commitment to Climate Action

** S&P Trucost Limited © Trucost 2021

**

80

KBC Group

Annex 3

Other items

81

Interest rate sensitivity

y1 y2 y3

4%

12%

17%

Impact of an immediate +100bps parallel rate shock across all currencies on NII at KBC Group level

This impact is based on:▪ a static balance sheet▪ a conservative pass-through rate

%: change on NII at KBC Group level as % of total FY20 reported NII

82

Loan loss experience at KBC

1Q21CREDIT COST

RATIO

FY20CREDIT COST

RATIO

FY19CREDIT COST

RATIO

FY18CREDIT COST

RATIO

FY17CREDIT COST

RATIO

AVERAGE ‘99 –’20

Belgium -0.21% 0.57% 0.22% 0.09% 0.09% n/a

Czech Republic -0.16% 0.67% 0.04% 0.03% 0.02% n/a

International Markets

0.00% 0.78% -0.07% -0.46% -0.74% n/a

Group Centre -0.09% -0.23% -0.88% -0.83% 0.40% n/a

Total -0.17% 0.60% 0.12% -0.04% -0.06% 0.43%

Credit cost ratio: amount of losses incurred on troubled loans as a % of total average outstanding loan portfolio

83

• The Irish economy has weathered the Covid-19 crisisrelatively well in terms of growth impacts due to theinfluence of a buoyant multinational sector and substantialfiscal support to household incomes. Preliminary estimatesshow that Irish GDP grew by 3.4% in 2020 and a somewhatstronger growth rate is envisaged in 2021

• The impact of the pandemic on the Irish jobs market hasbeen pronounced reflecting significant health relatedrestrictions on mobility and activity. As a result,unemployment has risen significantly and is likely to remainwell above pre-pandemic levels despite a markedimprovement in domestic spending

• While property transactions fell sharply in 2020, house pricesproved far more resilient than envisaged. Official house pricedata showed a broadly flat trend in the immediate wake ofthe pandemic and a modest firming subsequently reflectingsustained strength in demand and curtailment of new supply

• Impaired loan portfolio decreased by roughly 43m EUR q-o-q,resulting in impaired loan ratio reducing to 13.4%

• The 0m EUR net impairment release in 1Q21 reflectsimproved macro-economic variables and scenario weightingsoffset by management adjustment to stage 3 ECLs

- Forborne loans (in line with EBA Technical Standards) comprise loans on a live restructure or continuing to serve a probation period post-restructure/cure to Performing.

Ireland: impaired loans continue to improveIMPAIRED LOANS

PD 10-12

COVERAGE

Owner occupied mortgages 9,692 1,247 13% 311 25%

Buy to let mortgages 568 134 24% 52 39%

Non Mortgage Retai l & SME 128 6 5% 5 80%

Corporate 4 4 100% 2 58%

Total 10,391 1,390 13% 370 27%

IMPAIRED LOANS

PD 10-12

PROVISIONS PD

10-12 LOAN PORTFOLIO €m IMPAIRED LOANS OUTSTANDING

37.5%

23.1%

16.4%13.9% 13.4%

End of 2017 End of 2018 End of 2019 End of 2020 1Q21

Proportion of Impaired Loans

Impaired Loan (PD 10-12)

1Q21 Total Portfolio

PD Exposure Impairment

Provisions

Cover %

PD 1-8 8,470 15 0.2%

Of which non Forborne 8,470

Of which Forborne 0

PD 9 531 55 10.4%

Of which non Forborne 179

Of which Forborne 352

PD 10 633 73 11.5%

PD 11 663 232 34.9%

PD 12 94 65 69.4%

TOTAL PD1-12 10,391 441

PD 10-12 Impairment Provisions /(PD 10-12) 26.6%

Impaired loans (PD 10-12)/ Total Exposure 13.4%

Pe

rfo

rmin

gIm

pai

r.

84

Sectorial breakdown of outstanding loan portfolio (1)(180bn EUR*) of KBC Bank Consolidated

11%

7%

13%

6%

7%

4%3%3%3%

44%

Agriculture, farming, fishing

Services

Distribution

Building & construction

Real estate

Rest

Finance & insurance

Authorities

Automotive

Private Persons

1.5%

0.5%

Electricity

1.4%

4.4%

1.8%

1.4%

Chemicals

Food producers

Metals

0.6%

Other sectors

0.9%Machinery & heavy equipment

Shipping 0.8%

Hotels, bars & restaurantsOil, gas & other fuels

* It includes all payment credit, guarantee credit (except for confirmations of letters of credit and similar export/import related commercial credit), standby credit and credit derivatives, granted by KBC to private persons, companies, governments and banks. Bonds held in the investment portfolio are included if they are corporate or bank issued, hence government bonds and trading book exposure are not included* Outstanding amount includes all on-balance sheet commitments and off-balance sheet guarantees

85

Geographical breakdown of the outstanding loan portfolio (2)(180bn EUR*) of KBC Bank Consolidated

16.8%

54.2%

0.2%

Belgium

Slovakia

Czech Rep.

Ireland 5.9%

5.7%

3.3%

Hungary 2.2%

Bulgaria 7.4%

Other W-EurOther CEE

1.4%

North America

1.4%

Asia

1.6%

Rest

* It includes all payment credit, guarantee credit (except for confirmations of letters of credit and similar export/import related commercial credit), standby credit and credit derivatives, granted by KBC to private persons, companies, governments and banks. Bonds held in the investment portfolio are included if they are corporate or bank issued, hence government bonds and trading book exposure are not included* Outstanding amount includes all on-balance sheet commitments and off-balance sheet guarantees

86

Impaired loans ratios, of which over 90 days past due


1.9%

3Q201Q20

1.8%1.9%

2Q20

1.8%

4Q20

1.8%

1Q21

3.3% 3.4%3.2% 3.3% 3.3%

Impaired loans ratio

Of which over 90 days past due

3Q201Q20

1.1% 1.2% 1.1%

2Q20

1.0%

4Q20

1.0%

1Q21

2.3%2.2%2.2%

2.1%2.2%

4.2%4.5%4.9%

2Q201Q20

4.8%

3Q20 4Q20

4.0%

1Q21

6.9%

8.2%7.8%

7.2%6.7%

BELGIUM BU

1.2%

3Q202Q20

1.1%

1Q20 4Q20

1.2% 1.2% 1.1%

1Q21

2.2% 2.3%2.4%

2.2%2.4%

KBC GROUP

87

Cover ratios


BELGIUM BUKBC GROUP

1Q211Q20

44.8%

2Q20 3Q20

62.4%

4Q20

43.4%

60.4%

45.2%

61.7%

44.7%

63.5%

42.9%

63.0%

Impaired loans cover ratio

Cover ratio for loans with over 90 days past due

49.2%

1Q20

47.2% 49.3%

2Q20

47.2%

3Q20 4Q20 1Q21

66.9% 66.0% 66.1%

48.7%

70.1% 69.8%

2Q201Q20

41.3%

3Q20 1Q214Q20

44.9%

67.4%62.6%

45.4%

65.9%

46.4%

65.4%

45.6%

68.3%

34.7%

1Q20 1Q212Q20

47.0%

3Q20 4Q20

32.4%35.2%

48.7%

34.0%

46.5%

34.4%

47.4% 48.0%

88

Fully loaded B3 CET1 based on the Danish Compromise (DC)from 4Q20 to 1Q21

Jan 2012 2014-2020

4Q20 (B3 DC**)

0.8

Volume & FX

0.3

Market RWA

-0.3

TRIM

-0.1

Other

102.8

1Q21 (B3 DC)

102.1

DELTA AT NUMERATOR LEVEL (BN EUR)

DELTA ON RWA (BN EUR)

* Includes the q-o-q delta in deferred tax assets on losses carried forward, intangible fixed assets, AT1 coupon, etc.

** Includes the RWA equivalent for KBC Insurance based on DC, calculated as the historical book value of KBC Insurance multiplied by 370%

▪ Fully loaded B3 commonequity ratio stabilised q-o-qat 17.6% at the end of 1Q21based on the DanishCompromise

▪ This clearly exceeds theOverall Capital Requirement(OCR) of 10.45% and theMaximum DistributableAmount (MDA) of 10.34%

0.15

B3 CET1 at end 1Q21 (DC)Remeasurement of Defined Benefit Obligations

18.11

B3 CET1 at end 4Q20 (DC) Other*

0.01

17.95

89

Overview of B3 CET1 ratios at KBC Group

Method Numerator Denominator B3 CET1 ratio

FICOD*, fully loaded 19,493 116,440 16.7%

DC**, fully loaded 18,108 102,796 17.6%

DM***, fully loaded 17,458 98,207 17.8%

* FICOD: Financial Conglomerate Directive** DC: Danish Compromise*** DM: Deduction Method

90

✓ The resolution plan for KBC is based on a Single Point of Entry (SPE) approach at KBC Group level, with bail-in as the preferred resolution tool

✓ The SRB communicated to KBC new draft MREL targets (under BRRD2), expressed as a percentage of Risk Weighted Assets (RWA) and LeverageRatio Exposure Amount (LRE), which will replace the current MREL target of 9.67% of TLOF (which needed to be achieved by 31-12-2021)

✓ The new binding MREL targets are:

➢ 22.13% of RWA as from 01-01-2024 with an intermediate target of 21.63% as from 01-01-2022 (the CBR needs to be met on top)

➢ 7.34% of LRE as from 01-01-2022

TLOF MCC CBR Combined Buffer Requirement = Conservation Buffer (2.5%) + O-SII buffer (1.5%) + Countercyclical Buffer (0.20%), comes on top of the MREL target

KBC complies with resolution requirementsNew MREL targets applicable as from 01-01-2024, with intermediate targets as from 01-01-2022

LAA

RCA

MCC

1.75% P2R

4.20% CBR

1.75% P2R

4.27% - 0.9375%

@1

00

% R

WA

& L

RE

1.5%1.9%

5.9%

6.6%

1Q21

27.4%

HoldCo senior

T2

CET1

@9

4,6

% R

WA

& L

RE

8% P1

8% P1

22.13%

CBR

26.33%

MREL target

MREL + CBR

Total Liabilities and Own Funds LAA Loss Absorbing Amount RCA ReCapitalisation AmountMarket Confidence Charge = CBR (4.27% as at 2Q 2020) minus 93.75 bps; the discount will decrease in the next years to reach the BRRD2 reference level of CBR minus the Countercyclical Buffer

3% P1

3% P1

Add-on up to 8% TLOF

7.34%

18.1%

Actuals In % of RWA In % of LRE

6.6%

1Q21

8.3%

0.4%0.6%

1.8%

5.5%

AT1

Targets In % of RWA In % of LRE

1.5bn2.0bn

6.0bn

6.6%

1Q21

18.6bn

28.1bn

91

Available MREL as a % of RWA and LRE (BRRD2)

* Taking into account the withdrawal of the final gross dividend over 2019 profit of 2.5 EUR per share** As of 1H20, MREL ratio includes the impact of IFRS9 transitional measures

1Q21**FY19 1H20**1Q20* 9M20**

26.2%

FY20**

25.6% 25.6% 26.3%27.9% 27.4%

Available MREL as a % of RWA

9.5%

1Q21**FY19

9.3%

1Q20* 1H20** 9M20**

8.6%

FY20**

8.7%9.3%

8.3%

Available MREL as a % of LRE

▪ The MREL ratio decreased both in % of RWA and in % of LRE as 1.25bn EUR available MREL instruments becameineligible (as their maturity date is now < 1 year), only partly offset by a 750m EUR Senior Holdco issuance in 1Q21

▪ Furthermore, increased short-term money market and repo opportunities also impacted available MREL as a % of LRE

92

Government bond portfolio – Notional value

▪ Notional investment of 52.0bn EUR in government bonds (excl. trading book) at end of 1Q21, primarily as aresult of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-incomeinstruments

▪ Notional value of GIIPS exposure amounted to 5.9bn EUR at the end of 1Q21

27%

20%

6%7%

12%

9%

5%

Slovakia

Belgium

Germany **Spain

Czech Rep.2%

Bulgaria**

Hungary Poland

3%3%

Portugal *

Italy

France

Other

Austria *Netherlands *

Ireland

END OF 1Q21(Notional value of 52.0bn EUR)

(*) 1%, (**) 2%

27%

19%

6%7%

12%

9%

5%

Belgium

Czech Rep.3%

PolandHungary

3%

Bulgaria**

3%

Slovakia

Italy

France

Other

SpainGermany **

Austria *Netherlands *

IrelandPortugal *

END OF FY20(Notional value of 51.4bn EUR)

(*) 1%, (**) 2%

93

Government bond portfolio – Carrying value

▪ Carrying value of 54.8bn EUR in government bonds (excl. trading book) at end of 1Q21, primarily as a result of a significant excess liquidity position and the reinvestment of insurance reserves in fixed-income instruments

▪ Carrying value of GIIPS exposure amounted to 6.6bn EUR at the end of 1Q21

* Carrying value is the amount at which an asset (or liability) is recognised: for those not valued at fair value this is after deducting any accumulated depreciation (amortisation) and accumulated impairment losses thereon, while carrying amount is equal to fair value when recognised at fair value

END OF 1Q21(Carrying value of 54.8bn EUR)

(*) 1%, (**) 2%

27%

18%

6%7%

12%

9%

5%

Belgium

Hungary

Austria *

Poland

3%Czech Rep.

Slovakia

Italy

3%

Other

3%

Bulgaria**

France

SpainGermany **

Netherlands *Ireland

Portugal *

END OF FY20(Carrying value of 54.7bn EUR)

(*) 1%, (**) 2%

27%

18%

6%7%

12%

9%

5%

3%

Belgium

Czech Rep.3%

Bulgaria**

PolandHungary

Netherlands *

Slovakia

3%

Italy

France

Other

SpainGermany **

IrelandAustria *

Portugal *

94

Upcoming mid-term funding maturities

▪ In January 2021, KBC Group issued a senior benchmark for anamount of 750m EUR with an 8-year maturity with call date after 7years

▪ KBC Bank has 6 solid sources of long-term funding:

• Retail term deposits

• Retail EMTN

• Public benchmark transactions

• Covered bonds

• Structured notes and covered bonds using the privateplacement format

• Senior unsecured, T1 and T2 capital instruments issued at KBCGroup level and down-streamed to KBC Bank

42%

2%8%12%

36%

0.6 %

1.5%

0.6%

0.8%0.7%

0.4%

0.3%

0.5%

0

1000

2000

3000

4000

5000

6000

7000

2021 2022 2023 2024 2025 2026 2027 >= 2028

m E

UR

Breakdown Funding Maturity Buckets

Senior Unsecured - Holdco Senior Unsecured - Opco Subordinated T1 Subordinated T2 Covered Bond

Total outstanding

= 18.9bn EUR

(Including % of KBC Group’s balance sheet)

95

Glossary (1)

AQR Asset Quality Review

B3 / B4 Basel III / Basel IV

CBI Central Bank of Ireland

Combined ratio (non-life insurance)[technical insurance charges, including the internal cost of settling claims / earned premiums] + [operating expenses / written premiums] (after reinsurance in each case)

Common equity ratio [common equity tier-1 capital] / [total weighted risks]

Cost/income ratio (group) [operating expenses of the group] / [total income of the group]

Cost/income ratio adjusted for specific items

The numerator and denominator are adjusted for (exceptional) items which distort the P&L during a particular period in order to provide a better insight into the underlying business trends. Adjustments include: • MtM ALM derivatives (fully excluded)• bank & insurance taxes (including contributions to European Single Resolution Fund) are included pro rata and hence spread over all quarters of the year

instead of being recognised for the most part upfront (as required by IFRIC21)• one-off items

Credit cost ratio (CCR)[annualised net changes in individual and portfolio-based impairment for credit risks] / [average outstanding loan portfolio]. Note that, inter alia, government bonds are not included in this formula. As the full collective Covid-19 expected credit losses (ECL) have been booked in 1H20, they were not annualised to calculate the ratio in 1H20

EBA European Banking Authority

ESMA European Securities and Markets Authority

ESFR European Single Resolution Fund

FICOD Financial Conglomerates Directive

Impaired loans cover ratio [total specific impairments on the impaired loan portfolio (stage 3) ] / [part of the loan portfolio that is impaired (PD 10-11-12) ]

Impaired loans ratio [part of the loan portfolio that is impaired (PD 10-11-12)] / [total outstanding loan portfolio]

Leverage ratio[regulatory available tier-1 capital] / [total exposure measures]. The exposure measure is the total of non-risk-weighted on and off-balance sheet items, based on accounting data. The risk reducing effect of collateral, guarantees or netting is not taken into account, except for repos and derivatives. This ratio supplements the risk-based requirements (CAD) with a simple, non-risk-based backstop measure

Liquidity coverage ratio (LCR) [stock of high quality liquid assets] / [total net cash outflow over the next 30 calendar days]

Management overlayOur Expected Credit Loss (ECL) models were not able to adequately reflect all the specifics of the Covid-19 crisis or the various government measures implemented in the different countries to support households, SMEs and Corporates through this crisis. Therefore, an expert-based calculation at portfolio level is required via a management overlay

96

Glossary (2)

MARS Mortgage Arrears Resolution Strategy

MREL Minimum requirement for own funds and eligible liabilities

Net interest margin (NIM) of the group [banking group net interest income excluding dealing room] / [banking group average interest-bearing assets excluding dealing room]

Net stable funding ratio (NSFR) [available amount of stable funding] / [required amount of stable funding]

PD Probability of default

Return on allocated capital (ROAC) for a particular business unit

[result after tax, including minority interests, of a business unit, adjusted for income on allocated capital instead of real capital] / [average capital allocated to the business unit]. The capital allocated to a business unit is based on risk-weighted assets for banking and risk-weighted asset equivalents for insurance

Return on equity[result after tax, attributable to equity holders of the parent] / [average parent shareholders’ equity, excluding the revaluation reserve for fair value through Other Comprehensive Income (OCI) assets]

TLAC Total loss-absorbing capacity

97

Contacts / Questions

Company website: www.kbc.com

Download the KBC IR APP

http://www.kbc.com/

kbc group company presentation 1q 2021 · 2021. 6. 12. · company presentation 1q 2021 kbc group -...

Documents